Arriva for sale?

[talltim]

but Arriva doesn't operate in Germany.

So there three possible outcomes:

* Someone take hold of the whole company and that carries on as if.
* Someone takes hold but sells of UK bus operations.
* Someone takes hold and then breaks up the whole company to different parties.

I will never understand why DB brought Arriva there have done nothing with it, not even merged it into DB..

Why the UK bus operations in particular? What is different about them?
I think DB bought Arriva mainly because they were winning a lot of contracts from them on the German network. They had to sell off the German Arriva rail part because of competition rules, but still managed to neutralise the threat a bitr.

 

[Robertj21a]

So there three possible outcomes:

* Someone take hold of the whole company and that carries on as if.
* Someone takes hold but sells of UK bus operations.
* Someone takes hold and then breaks up the whole company to different parties.

I will never understand why DB brought Arriva there have done nothing with it, not even merged it into DB..

It was an investment and a separate income stream. They had no need to merge it into DB (and possibly benefitted by not doing so).

 

[LNW-GW Joint]

Time-limited franchises or concessions are not very asset-rich, so Arriva is not as valuable as it might appear at first sight.
As National Express has shown, you can lose revenue and market share very quickly as operations are rebid.
Arriva's capability to bid in multiple markets, with a core management team already on the ground, is probably very attractive.
Not having a German arm is a bit of a gap, especially with the upcoming contracting of regional services.

 

[MedwayValiant]

Wouldn't a flotation out of Frankfurt be a likely option ?

Frankfurt is certainly possible, although Arriva doesn't have any operations in Germany and it would seem odd for a company to be floated from a country where it doesn't do business.

Arriva was a British company before it was bought by Deutsche Bahn, and the Arriva-branded operations across Europe report to Sunderland rather than directly to Berlin. That would make London the obvious choice - but Amsterdam would perhaps be the next choice if it was felt desirable to be in the EU and the eurozone.

 

[overthewater]

Why the UK bus operations in particular? What is different about them?
I think DB bought Arriva mainly because they were winning a lot of contracts from them on the German network. They had to sell off the German Arriva rail part because of competition rules, but still managed to neutralise the threat a bitr.

Lets just say the UK bus isn't well loved compared to the rest of the EU.

It was an investment and a separate income stream. They had no need to merge it into DB (and possibly benefitted by not doing so).

It doesn't seem to have worked out.

 

[MedwayValiant]

Lets just say the UK bus isn't well loved compared to the rest of the EU.

And beyond that, Arriva isn't even especially well loved compared to the rest of the UK bus industry.

It's hard to imagine anyone wanting all of Arriva's UK bus operation. Stagecoach is the least unlikely (on the basis that it's got the money, and probably no one else has), but for competition reasons wouldn't be allowed to buy it even if it wanted to. Finding buyers for parts of the UK bus operation wouldn't be too difficult. We've said we won't go down the road of [name operator] might be interested in [name operating area] at this stage so let's not, but some parts would be much easier to sell than others.

This is going to be a challenge. If the whole of Arriva is indeed to be sold in one piece, the buyer will perforce acquire some operations that it doesn't really want. It will probably try to sell them on straight away, and it will reduce the sum it is willing to pay for the whole thing to cover the costs of the bits it doesn't really want. If I offer you ten diamonds and a sack of manure, you'll pay less for that than you would for just the ten diamonds, because you're getting a sack of manure that you didn't really want and you've either got to do something with it or pay someone to take it away.

But if Arriva sees that coming and so decides to do the divesting first, that means finding buyers - and they may not be easy to come by.

 

[overthewater]

It's possible Nat Exp and Rotala are the most likley companies, However Transdev would only be looking for some higher end areas. Go Ahead would be interested in two parts straight off the bat in southern England.

Remember Rotala does have money to burn.

 

[cactustwirly]

It's possible Nat Exp and Rotala are the most likley companies, However Transdev would only be looking for some higher end areas. Go Ahead would be interested in two parts straight off the bat in southern England.

Remember Rotala does have money to burn.

It's way out of Rotala's league!
I actually think Keolis, RATP or Transdev will buy it!
Transdev have quite a few contracts in Germany, with BOB, Meridian etc, and they have bus operations over here.

 

[duncombec]

It's possible Nat Exp and Rotala are the most likley companies, However Transdev would only be looking for some higher end areas. Go Ahead would be interested in two parts straight off the bat in southern England.

Remember Rotala does have money to burn.

Please remember this is the entirety of Arriva, including operations outside the UK.

There is no point whatsoever in throwing suggestions around as to which transport group currently operating in the UK might take over. As someone pointed out further up, there is a high likelihood it will be sold like Stagecoach's London operation to an entirely non-transport related owner (albeit probably not Macquarie!). Out of interest, does anyone with a longer memory than me recall whether it being sold to Deutsche Bahn was expected at the time?

As was also mentioned above, most (although not all) UK-based transport operators either have, or have previously had, operations in Europe. The two are totally different markets (as some members here never tire of pointing out), and there is no guarantee they will want to be exposed to the alternatives, or indeed that they will be permitted to do so. I would argue that having operations in a variety of countries where Arriva have operations makes them less likely to be purchasers.... if it even goes ahead at all. The Supervisory Board have asked the Management Board to look... they could just as easily ask them to stop.

You are about 4 days early for the Rotala comment.

 

[LNW-GW Joint]

I seem to remember that SNCF were said to be interested in buying the original Arriva in 2010, only for DB to beat them to a deal.
Partly this was to forestall SNCF expansion in Europe (who now have fingers in several more pies, eg Italo).
DB already had a Regio operation in the UK (Chiltern, Tyne & Wear and half of LO), and merged these operations into Arriva.
They also had the former EWS operation (now DB Cargo). At one point DB were said to be considering selling off Cargo as well as Arriva (ie exiting the UK).
For all their successes on the continent, Arriva in DB ownership has only won one UK franchise - Northern (plus the second LO concession).

 

[overthewater]

There is no point whatsoever in throwing suggestions around as to which transport group currently operating in the UK might take over.

I highlighted who could possible acquire parts since throwing out First or Stagecoach would be draft. I do not believe Arriva will be brought as seen and then kept together. I do think there's a chance it will be partly split up, in what way I do not know.

 

[Glenn1969]

Are fringe operations like Grand Central rail and Yorkshire Tiger bus at risk from DB's decision to look for a buyer for Arriva?

 

[TheGrandWazoo]

I highlighted who could possible acquire parts since throwing out First or Stagecoach would be draft. I do not believe Arriva will be brought as seen and then kept together. I do think there's a chance it will be partly split up, in what way I do not know.

Why?

Whereabouts in that statement does it say that there is any form of breakup? It was exactly this sort of "frenzied and silly speculation of "I could see <insert name of UK bus operator> go for <insert name of Arriva OpCo> because of <insert simplistic reason on grounds of geography" that I just knew some people would indulge in.

They say that they are looking at one or more INVESTORS or an IPO but you're acting on a "hunch" that it won't be, based on.......what?

 

[TheGrandWazoo]

Are fringe operations like Grand Central rail and Yorkshire Tiger bus at risk from DB's decision to look for a buyer for Arriva?

Certainly not initially. They are looking to sell the entire group either to one or more investors.

Before certain people get all excited about the "or more" bit, remember that Heinz Foods was bought by Berkshire Hathaway and 3G Capital - two investment firms working in partnership.

What they aren't going to do is spend a load of time and money selling of little chunks here and there? They want the money sooner than that.

 

[overthewater]

Why?

Whereabouts in that statement does it say that there is any form of breakup? It was exactly this sort of "frenzied and silly speculation of "I could see <insert name of UK bus operator> go for <insert name of Arriva OpCo> because of <insert simplistic reason on grounds of geography" that I just knew some people would indulge in.

They say that they are looking at one or more INVESTORS or an IPO but you're acting on a "hunch" that it won't be, based on.......what?

Brexit is a good start, I also don't believe Arriva as a group has been great over all. Its been very lackluster especial since DB has come along, I think private equity will come knocking and do a disney.

 

[TheGrandWazoo]

Brexit is a good start, I also don't believe Arriva as a group has been great over all. Its been very lackluster especial since DB has come along, I think private equity will come knocking and do a disney.

Ok - let's explore this further....

In what way is it a "Disney"?

Why don't you believe Arriva that, as a group, it has been great over all?

Why will Brexit be an issue?

 

[WatcherZero]

Its quite impressive that since DB bought Arriva in 2010 they've managed to triple the size of the company.

 

[Robertj21a]

It's possible Nat Exp and Rotala are the most likley companies, However Transdev would only be looking for some higher end areas. Go Ahead would be interested in two parts straight off the bat in southern England.

Remember Rotala does have money to burn.

It seems that you really have no idea of the scale of the Arriva group operations !!

 

[Bletchleyite]

Its quite impressive that since DB bought Arriva in 2010 they've managed to triple the size of the company.

Was that not more by putting basically their entire international passenger operations into it? For instance Chiltern wasn't an Arriva franchise win, it was moved there from DB Regio AG where it formerly sat.

 

[transmanche]

Remember Rotala does have money to burn.

Do they have a few billion £££ spare? Because that's what Arriva is worth.

Arriva employs 53,000 people across 14 countries in Europe, with an annual turnover of £4.62billion. Rotala's turnover is about £55million.

 

[Bevan Price]

It is all speculation at present. Will the new owners want quick profits, or be happy to receive a long-term steady income ? Will they let existing managements continue, or will they want to change almost everythng ? We just don't know.
If they are after quick profits, then has Arriva any property in prime development sites that could be sold - bus depots, etc?
Unprofitable / marginally profitable bus routes might be even more at risk than they are now.
DBC rail freight - can they start regaining business lost to other freight comapanies ?
Arriva rail franchises -- will they wish to continue bidding for these, or will they opt out of UK rail passenger work?
Potentially interesting times ahead ?

 

[transmanche]

DBC rail freight - can they start regaining business lost to other freight comapanies ?

DB Cargo is not part of Arriva.

 

[TheGrandWazoo]

It is all speculation at present. Will the new owners want quick profits, or be happy to receive a long-term steady income ? Will they let existing managements continue, or will they want to change almost everythng ? We just don't know.
If they are after quick profits, then has Arriva any property in prime development sites that could be sold - bus depots, etc?
Unprofitable / marginally profitable bus routes might be even more at risk than they are now.
DBC rail freight - can they start regaining business lost to other freight comapanies ?
Arriva rail franchises -- will they wish to continue bidding for these, or will they opt out of UK rail passenger work?
Potentially interesting times ahead ?

So perhaps wait until we understand how it might be sold and to whom?

 

[MotCO]

If the whole of Arriva is indeed to be sold in one piece, the buyer will perforce acquire some operations that it doesn't really want. It will probably try to sell them on straight away, and it will reduce the sum it is willing to pay for the whole thing to cover the costs of the bits it doesn't really want. If I offer you ten diamonds and a sack of manure, you'll pay less for that than you would for just the ten diamonds, because you're getting a sack of manure that you didn't really want and you've either got to do something with it or pay someone to take it away.

Could it be the case that the sum of the parts is worth more than the whole? Might it make more sense to sell it bit by bit? It might take a bit longer, but you might receive a better price overall, plus you have more parties able to afford to enter the race, stoking up competition.

 

[TheGrandWazoo]

Could it be the case that the sum of the parts is worth more than the whole? Might it make more sense to sell it bit by bit? It might take a bit longer, but you might receive a better price overall, plus you have more parties able to afford to enter the race, stoking up competition.

That’s as may be but that is NOT what DB are going to do.

They are looking to divest/sell in one lump in order to undertake the process quickly rather than faffing around for years selling off bits here and there and so requiring a hell of a lot more management time and also not getting the money quickly.

To everyone - READ THE PRESS RELEASE AND THEN, READ IT AGAIN.

 

[Fawkes Cat]

They are looking to divest/sell in one lump in order to undertake the process quickly rather than faffing around for years selling off bits here and there and so requiring a hell of a lot more management time and also not getting the money quickly.

It is not unknown for a company to be sold, but for the purchasers to have a specific breakup plan in place. Something like this happened a few years ago with the Littlewoods retail business - the Barclay brothers were specifically interested in the home shopping business, but even before acquiring it they had agreed to sell most of the shops on to Primark and New Look.

I don't see it as implausible that something similar could happen with Arriva: a consortium agrees between themselves who will take what, and puts in a cheap bid financed by venture capitalists, giving DB the quick exit for cash that they seem to be looking for. Arriva's independent existence is then very short as the members of the consortium take away the pieces they want.

 

[TheGrandWazoo]

It is not unknown for a company to be sold, but for the purchasers to have a specific breakup plan in place. Something like this happened a few years ago with the Littlewoods retail business - the Barclay brothers were specifically interested in the home shopping business, but even before acquiring it they had agreed to sell most of the shops on to Primark and New Look.

I don't see it as implausible that something similar could happen with Arriva: a consortium agrees between themselves who will take what, and puts in a cheap bid financed by venture capitalists, giving DB the quick exit for cash that they seem to be looking for. Arriva's independent existence is then very short as the members of the consortium take away the pieces they want.

Indeed - that’s been the case whether it’s Unilever buying Bestfoods, and Hanson Trust made it their modus operandi.

However, until it’s known who is buying and why, any speculation is just utterly pointless. It becomes some fantasy game played in people’s bedrooms - “oooh - I could see X being interested in Y” - had all that rubbish with First with loads of speculation and yet no one “predicted” the London divestment until it was pretty much public knowledge.

 

[rich.davies]

Think you might have misread that. It’s not about a piecemeal selling of OpCos

Ah fair enough.

 

[Mikey C]

DB may need the money, but it's not good timing really. Apart from Brexit, rail franchises in the UK are less attractive then they were a few years ago when they were seen as a nice money earner.

I can't see too many transport operators wanting such a rag bag of operations either, if a transport group bought Arriva, I imagine they would then sell on quite a few of the operations, either for Competition purposes or due to incompatibility with their core business.

 

[LNW-GW Joint]

Arriva's "rag bag of operations" provides an entry into many transport markets across Europe.
That should be attractive to a number of ambitious transport operators who want a European-scale business, particularly as the national railways are opened up further.
The UK side may not be as attractive with its current franchise/concession setup, and upcoming Brexit with likely divergence from EU processes over time.
Just because Arriva UK is in the doghouse over some current local issues doesn't detract from the overall value of the Europe-wide scale of the business.
This link summarises the Arriva presence in 14 countries:
https://www.arriva.co.uk/countries
eg for Denmark:

Arriva is the largest bus operator in Denmark and was the first, and only, private company to be awarded a rail contract in the country. Today, Arriva has an overall share of 40 per cent of the bus market and approximately 15 per cent of the regional rail network.