McGills to be bought out?

TheGrandWazoo · 9 Dec 2013

overthewater said:
Why hasn't Go Ahead come out against this?

Why should they have to justify or respond to speculation on some message board? No real speculation in the markets which will be more of a consideration

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overthewater · 9 Dec 2013

TheGrandWazoo said:
Why should they have to justify or respond to speculation on some message board? No real speculation in the markets which will be more of a consideration

To be fair it has gone out on two newspapers and its currently linked to a share and boardroom disagreement in another company ie "Rangers"
Again the markets know about stuff we don't know about.

winston270twm · 10 Dec 2013

TheGrandWazoo said:
Why should they have to justify or respond to speculation on some message board? No real speculation in the markets which will be more of a consideration

But its not just speculation on some message board. Go-Ahead has been named in the Greenock Telegraph as the initial bidder who's takeover offer was rebuffed to be followed by a second un-named bidder who's takeover offer was also rebuffed. I highly doubt the stock market would pick up upon/be interested in chatter about a potential small scale takeover.

If the quoted price the Easdales are looking for is £98 million, I don't they have a prayer for a company with £28 Million turnover & £659k profits. On past takeovers at a premium, normally no more than £1 for every £1 of turnover would have been paid, therefore a £28 Million take out price would be far more realistic. For a bidder to get the McGills business up to £100 Million turnover, they would need to grow it by 3.5x and have a fleet in excess of a 1000 buses

TheGrandWazoo · 10 Dec 2013

overthewater said:
To be fair it has gone out on two newspapers and its currently linked to a share and boardroom disagreement in another company ie "Rangers"
Again the markets know about stuff we don't know about.

Sorry, perhaps I should've been more clear.

The financial press and the like are not jumping around on this, and as Winston says, this is not a big deal (despite what the Easdale's would like it to be

). The local rag in Greenock? Not exactly the FT, is it? It's of infinitely more interest to certain people on certain message boards, which is where most of the "news" has come from, and the local rag wanting to drum up a story.

Also, if ANY company has to respond to each and every enquiry, most of which will have no credence, then that's time consuming. Similarly, if they respond on every one where there's no interest, then what happens if they were to be in negotiations. They can't deny it and a "no comment" is basically a tacit admission and this stuff is contractually confidential.

Having worked in businesses that were in takeover negs, I can fully understand why Go Ahead don't come out. Make sense?

I appreciate that there are plenty of enthusiasts who might be desperate to know but this is business!

winston270twm · 10 Dec 2013

TheGrandWazoo said:
Sorry, perhaps I should've been more clear.

The financial press and the like are not jumping around on this, and as Winston says, this is not a big deal (despite what the Easdale's would like it to be ). The local rag in Greenock? Not exactly the FT, is it? It's of infinitely more interest to certain people on certain message boards, which is where most of the "news" has come from, and the local rag wanting to drum up a story.

Also, if ANY company has to respond to each and every enquiry, most of which will have no credence, then that's time consuming. Similarly, if they respond on every one where there's no interest, then what happens if they were to be in negotiations. They can't deny it and a "no comment" is basically a tacit admission and this stuff is contractually confidential.

Having worked in businesses that were in takeover negs, I can fully understand why Go Ahead don't come out. Make sense?

I appreciate that there are plenty of enthusiasts who might be desperate to know but this is business!

TheGrandWazoo,

I agree the GT is hardly the FT.

I still maintain £30 million is a more realistic takeover price. First Group only got got £80 Million for their entire London operation comprising 900 buses

TheGrandWazoo · 10 Dec 2013

winston270twm said:
TheGrandWazoo,

I agree the GT is hardly the FT.

I still maintain £30 million is a more realistic takeover price. First Group only got got £80 Million for their entire London operation comprising 900 buses

Depends how much of the London assets were owned etc but also as it's a low return business, that will depress the purchase price. Another comparison is the purchase of First's Wigan depot. Now that was £12m for 100 vehicles (excl. 20 operated but owned by TfGM).

That is a potentially better area (less competition) than Renfrewshire/Glasgow so I'd be assessing a price for McGills somewhere in the £35m bracket

kylemore · 10 Dec 2013

I wonder if Mr S is maintaining a watching brief from sunny Perth?

Would fit in nicely to Stagecoach Western.

GaryMcEwan · 10 Dec 2013

kylemore said:
I wonder if Mr S is maintaining a watching brief from sunny Perth?

Would fit in nicely to Stagecoach Western.

Well Ann Gloag's name was floated about as the second party months ago, but that's never been substantiated...

Yeah I also do think it would fit in well with Stagecoach Western...

overthewater · 10 Dec 2013

NO one from stagecoach would be allowed near this company, the OFT and CC would have a field day.

I see the owners have increased their shares in Rangers.

TheGrandWazoo · 11 Dec 2013

overthewater said:
NO one from stagecoach would be allowed near this company, the OFT and CC would have a field day.

I see the owners have increased their shares in Rangers.

I agree with OTW on this. There's no way that Stagecoach would get this one waived through. Preston was overturned and the relatively small purchase of First's Barnstaple operation was referred.

tbtc · 11 Dec 2013

I appreciate that any major purchase will be scrutinised (and if Barnstaple was big enough to attract the CC...), but do McGills and Stagecoach really compete that much?

Western Scottish used to include the Clydeside operations, after all...

(am not saying it would ever happen, am not claiming any insight etc etc)

TheGrandWazoo · 12 Dec 2013

tbtc said:
I appreciate that any major purchase will be scrutinised (and if Barnstaple was big enough to attract the CC...), but do McGills and Stagecoach really compete that much?

Western Scottish used to include the Clydeside operations, after all...

(am not saying it would ever happen, am not claiming any insight etc etc)

The Competition Commission have to look not only at how competition may be reduced at current levels but also the likelihood of future competition. To illustrate.... Stagecoach and Arriva co-exist on Teesside. Whilst they work cheek by jowl, there are actually very few areas where they actually operate over each others' territory

Stagecoach operate exclusively to Norton, Billingham, Coulby Newham, Acklam
Arriva have East Cleveland plus Thornaby, Yarm, Marton, etc

The only areas where they operate over the same route is through North Ormesby to the hospital (an extension of one corridor of Stagecoach routes into Arriva territory) and Durham Road in Stockton whereby a number of Arriva routes running into Stockton from Co Durham run over what is largely Stagecoach land. In short, they don't compete but could one take over the others' operations? Nope, as suddenly the theoretical leverage of the local authorities on tenders etc would be gone

That would be the same in Strathclyde if you basically reduced the number of major bus operators from 3 to 2. And if you do that, will smaller operators be deterred from entering the commercial and/or tendered market? It's a bit broadbrush from me, but hope you understand what I'm getting at

kylemore · 12 Dec 2013

Ok, but Mr S is getting very cosy with West Coast Motors - could he come in that way?
--- old post above --- --- new post below ---

TheGrandWazoo said:
I agree with OTW on this. There's no way that Stagecoach would get this one waived through. Preston was overturned and the relatively small purchase of First's Barnstaple operation was referred.

For various reasons First are out of political favour but Stagecoach and in particular Mr S are certainly not.

TheGrandWazoo · 12 Dec 2013

kylemore said:
Ok, but Mr S is getting very cosy with West Coast Motors - could he come in that way?
--- old post above --- --- new post below ---

For various reasons First are out of political favour but Stagecoach and in particular Mr S are certainly not.

Stagecoach would have an opportunity through WCM or any other firm as a trojan horse. However, the question is whether Stagecoach could buy McGills, which I doubt, nor First for that matter.

And if the Easdales are looking for £100m, then they've not got a hope in hell with a 350 strong fleet comprising some average ex London kit, some middle aged Arriva kit, and a smattering of newer stuff.

GaryMcEwan · 13 Dec 2013

Well Sandy Easdale confirmed himself today, that McGill's only made a profit of £450,000 last year, with a loss of £415,000 the year before that, so they are quite clearly delirious if they think they are going to get £100 million for the company...

Mr Manager · 14 Dec 2013

Sandy Easdale as said above must either increase or decrease his meds if he thinks he will get that for the company based on those figures.

i would value the company around 20 million depending on asset value. possibly even less. normal rule of thumb is Profit x 3 assets x 2 cash at bank x 3. i bet that does not come anywhere near any figures floating about.

Volvodart · 14 Dec 2013

£20million is around the same per bus amount that McGills bought Arriva Scotland West.

winston270twm · 14 Dec 2013

Volvodart said:
£20million is around the same per bus amount that McGills bought Arriva Scotland West.

I was thinking more around £1 of turnover per £1 takeout price, therefore around the £28 Million mark, certainly no more than £30 Million

317 forever · 14 Dec 2013

winston270twm said:
TheGrandWazoo,

I agree the GT is hardly the FT.

I still maintain £30 million is a more realistic takeover price. First Group only got got £80 Million for their entire London operation comprising 900 buses

This seems a low price compared to the £110 million they famously paid for Strathclyde Buses in 1996, which by then already included Kelvin Central.

TheGrandWazoo said:
Stagecoach would have an opportunity through WCM or any other firm as a trojan horse. However, the question is whether Stagecoach could buy McGills, which I doubt, nor First for that matter.

And if the Easdales are looking for £100m, then they've not got a hope in hell with a 350 strong fleet comprising some average ex London kit, some middle aged Arriva kit, and a smattering of newer stuff.

If Stagecoach do buy out West Coast Motors this would give them the former Oban & District operation. As GRT divested this from Midland Bluebird in 1992 this is the "one that got away" in terms of not reaching First.

winston270twm said:
I was thinking more around £1 of turnover per £1 takeout price, therefore around the £28 Million mark, certainly no more than £30 Million

I consider this a credible price to buy McGills. I wonder whether an operator will be keen enough to operate in Glasgow in time for the Commonwealth Games to buy out McGills?

Robertj21a · 14 Dec 2013

Well, as First and Stagecoach will be barred from buying McGills, the price won't be as high as it would be otherwise - particularly as either of those two could start up competitive operations against a new owner virtually straight away if they wanted. Stagecoach setting up a quality network around Paisley would be hard to beat.

I reckon anyone thinking it through would be unlikely to offer much over £20m.

Robert

oldman · 14 Dec 2013

I am not sure that Stagecoach would be barred from buying McGills - they hardly overlap and there would still be the same competition for First. You could even say that Stagecoach would be a bigger competitor because of their other Glasgow services. But it would take time for the OFT to deal with it and Stagecoach might not think it was worth the hassle.

As to valuation, another factor is debt. How did McGills raise the £10m for buying Arriva, and is it still on the balance sheet? As they've hardly made any profit in the last couple of years, it may be.

Volvodart · 15 Dec 2013

oldman said:
As to valuation, another factor is debt. How did McGills raise the £10m for buying Arriva, and is it still on the balance sheet? As they've hardly made any profit in the last couple of years, it may be.

McGills appear to be paying it off over a number of years. Around £2 million was due to be paid in 2013 and £4 million due to be paid from 2014 onwards. Arriva still hold title to the Arriva Scotland West properties until the consideration is satisfied.

oldman · 15 Dec 2013

Volvodart said:
McGills appear to be paying it off over a number of years. Around £2 million was due to be paid in 2013 and £4 million due to be paid from 2014 onwards. Arriva still hold title to the Arriva Scotland West properties until the consideration is satisfied.

Right, so when they say their profit is £600k, that is net, and the underlying profit is a lot more? Which would increase the valuation.

Volvodart · 15 Dec 2013

The £600K includes whatever profit or loss made by the old Arriva Scotland West business taken over. If they had already paid the whole £10million, the profit made would have been less because of the additional finance costs.

winston270twm · 15 Dec 2013

oldman said:
Right, so when they say their profit is £600k, that is net, and the underlying profit is a lot more? Which would increase the valuation.

If the £600k is their net profit before tax, then their gross profit before finance/accounting costs & capital investment would be more yes,
--- old post above --- --- new post below ---

oldman said:
I am not sure that Stagecoach would be barred from buying McGills - they hardly overlap and there would still be the same competition for First. You could even say that Stagecoach would be a bigger competitor because of their other Glasgow services. But it would take time for the OFT to deal with it and Stagecoach might not think it was worth the hassle.

As to valuation, another factor is debt. How did McGills raise the £10m for buying Arriva, and is it still on the balance sheet? As they've hardly made any profit in the last couple of years, it may be.

It's not just a question of looking a competing/overlapping services, the OFT/MMC would look at the bigger picture i.e. how much of the current Scottish bus market each of First Group & Stagecoach currently control

overthewater · 16 Dec 2013

http://news.stv.tv/west-central/256...ividuals-backing-investment-plan-for-rangers/

A good 30min interview, with Rangers director Sandy Easdale who owns McGills.

GaryMcEwan · 16 Dec 2013

overthewater said:
http://news.stv.tv/west-central/256...ividuals-backing-investment-plan-for-rangers/

A good 30min interview, with Rangers director Sandy Easdale who owns McGills.

He said that McGill's hasn't been sold, however he never said either yes or no to the £80 million did he though?

Volvodart · 15 Jan 2014

http://www.greenocktelegraph.co.uk/news/greenock/articles/2014/01/15/484979-firm-rules-out-pound100m-mcgillrsquos-bid/

Firm rules out £100m McGill’s bid

BylinePaul John Coulter

Published: 15 Jan 2014 13:30

A MAJOR bus company has ruled itself out of the running for a £100 million-rated Greenock firm.

Bosses at the Go-Ahead Group say they are not interested in buying McGill’s Buses, which is said to have been the subject of two recent bids in the region of £80m.

In December, the Tele revealed how two substantial offers had been made for the Larkfield-based operation, with Go-Ahead believed to be one of the suitors.

Brothers James and Sandy Easdale, the Greenock businessmen who own the company, were said to have knocked back the approaches because they want nearer £100m for the company.

Bosses at London-based Go-Ahead today said they were not interested in McGill’s.

A spokeswoman for the company said: “Go-Ahead has not put in any bid for this company.”

The Easdales took over McGill’s in 2001 and the company boasts a fleet of more than 350 vehicles.

It employs over 700 people across its operations in Inverclyde, Inchinnan, Johnstone, Dumbarton and Barrhead.

McGill’s moved back into the black last year, posting a profit of £659,404 compared with a loss of more than £550,000 the year before.

Turnover almost doubled from £15m to £28m following the takeover of rival Arriva Scotland West in 2012.

The Easdale brothers also have significant other business interests in Inverclyde and beyond including Blairs Windows, taxi firms and private and commercial property.

The duo own shares in Rangers FC and both are directors at Ibrox, with Sandy Easdale chairman of the club’s football board.

He owns a stake of just over 4.5 per cent in the club and holds voting rights over around a quarter of Rangers shares.

The brothers recently had online Rangers fans’ forum Sons of Struth shut down after alleged offensive comments and threats were posted about them.

overthewater · 15 Jan 2014

Its taken over a month to get a proper comment from Go-ahead, its more likely the price tag has killed it off.

mbonwick · 15 Jan 2014

It's not taken over a month - Go-Ahead stated categorically in December's Route One magazine that they'd made no approach at all for McGills, and that they'd asked the Greenock Telegraph to correct their article.

Shameful its taken this long for them to do that.

McGills to be bought out?

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