STAGECOACH yesterday said it had acquired Traction, the largest privately-owned bus business in the UK, in a GBP37m deal as part of the Scottish bus and rail giant's strategy to focus on its home turf and on core operations in the US.
The deal also triggered a GBP26m windfall for the man who led a management buy-out at Yorkshire-based Traction almost two decades ago, his family and some of the company's 2000 employees.
The Perth-based bus and rail group yesterday said it paid a total of about GBP37m forTraction in cash, shares and assumed debt.
Traction, which has its headquarters in Barnsley, has a history dating back to 1902, when it operated trams, before replacing them with buses and expanding geographically around the UK.
In 1969, Yorkshire Traction became part of the state owned National Bus Company that was privatised in 1987when the company was bought by its directors.
Stagecoach said the principal sellers were Frank Carter, who led a management-buy-out in 1987, two trusts in favour of Carter's family and a Traction employee ownership trust.
Under the terms of the acquisition, Stagecoach paid GBP26m, of which GBP21.5m was in cash, and assumed Traction's net debt of about GBP11m.
However, neither Stagecoach norTraction last night disclosed how the GBP26m would be divided up between Carter, 67, his family and Traction staff. Norwas it disclosed how many staff were entitled to a pay-out from the employee ownership trust.
Traction is the sixth-largest operator of bus services in the UK with businesses centred in Yorkshire, Lincolnshire and Tayside, where it operates 160 local buses and employs around 300 workers at depots in Dundee, Arbroath, Montrose, Forfar and Blairgowrie.
A spokesman for Stagecoach yesterday said no redundancies were planned.
Stagecoach shares rose 1.25p to 112.75p on news of the acquisition, which was welcomed by the City yesterday.
Investec Securities described the deal as "typical" for Stagecoach, buying "an underperforming company with the aim of turning the business around".
Stagecoach said it normally tends to work on "10-per cent-plus margins", but that Traction had been operating on an average margin of 4.4-per cent.
Meanwhile, the acquisition also highlights Stagecoach's ongoing restructuring plans, which is aimed at refocusing the company's activities on its core operations in the UK and the US.
Brian Souter, chief executive of Stagecoach, yesterday said: "The acquisition of Traction is consistent with our strategy for growth in our core UK and North American markets, and follows the acquisition of Glenvale Transport earlier this year."
In November, Stagecoach also agreed to sell its New Zealand transport business to Prestwick airport owner Infratil.
The Scottish transport operator made its first retreat to UK home markets early in 2004 with the surprise sale of its Hong Kong Citybus operations for GBP176m - after overpaying for the Asian business in 1999.
The company has also substantially slimmed down its Coach USA empire of taxi, bus and coach businesses.
Following the acquisition, the consolidated net debt of Stagecoach will increase by about GBP32.5m, the company said.
In addition to running buses and coaches Traction owns and operates a regional chain of travel agencies trading under the Travelink brand.
A spokesman for Stagecoach yesterday said the company had made no decision on whether to keep or divest itself of the travel agency division.
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