Arriva for sale?

Discussion in 'UK Railway Discussion' started by Towielad, 27 Mar 2019.

  1. Towielad

    Towielad Member

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    Mod Note: Due to the wide expanse of operational areas that Arriva cover, including buses and trains both in GB and overseas, and the risk of duplication from having multiple threads the Forum Staff have decided to have only one thread for the time being discussing the possible sale. This means that discussion to the implications to the bus or international operations of Arriva can be discussed on this thread. Even though this thread is not in the relevant sub-forums.

    We will keep the situation under review and will update members if there is a change in the position. Otherwise please feel free to discuss the potential implications to Arriva's operations without worry about whether it be bus, rail or international related.


    Posted on another site earlier this evening, statement from DB
     

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  3. Towielad

    Towielad Member

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    posted on another site earlier this evening a statement from DB regarding future of Arriva,
     

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  4. rich.davies

    rich.davies Member

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    Could turn out interesting if it happens. Might see Stagecoach expand into some areas particularly in N.Wales
     
  5. TheGrandWazoo

    TheGrandWazoo Veteran Member

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    Think you might have misread that. It’s not about a piecemeal selling of OpCos
     
  6. freetoview33

    freetoview33 Established Member

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    They might have to sell it off in bits though.
     
  7. TheGrandWazoo

    TheGrandWazoo Veteran Member

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    Again - read what it says.

    Exploring an IPO - that means spinning it off for its own public stock market listing OR selling it to one or more investors - that means Private Equity or similar.

    A protracted selling of bits and pieces to all and sundry isn’t how I’ve read that and wouldn’t quickly raise funds and would soak up a load of management time.
     
  8. whhistle

    whhistle On Moderation

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    Wonder if someone would buy the train operations part only?
    I guess the likes of First Group and Stagecoach couldn't buy them and rebrand the trains?
     
  9. Robertj21a

    Robertj21a Established Member

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    No, there's little likelihood of that approach in this case.
     
  10. LNW-GW Joint

    LNW-GW Joint Veteran Member

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    All DB's rivals will be interested in a deal for Arriva (SNCF, Trenitalia, NS etc).
    It's an easy way to buy market share across Europe, without the bother of having to bid for it.
    The uncertainties in the UK (Williams review and Brexit) don't exactly help future planning here.
    There can't be much appetite from our native franchise owners for expansion at the moment, unless they are after business on the continent.
    National Express and Go Ahead are both expanding in Germany, for instance (but Arriva doesn't operate in Germany).

    The DB statement also mentions the possibility of an IPO, ie floating Arriva as an independent company (as it was before DB bought it).
    DB simply wants the cash to prop up its domestic operation.
     
  11. Doctor Fegg

    Doctor Fegg Member

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    Let's have a whip-round.
     
  12. TheGrandWazoo

    TheGrandWazoo Veteran Member

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    Quite - in fact the announcement is clear that they are looking to sell 100% of the shares to one or more investors (that's financial investors such as Private Equity or Wealth Funds) or explore having an IPO which is an Initial Public Offering - essentially getting a large merchant bank to arrange a floatation on the stock exchange, so that financial institutions and the public can purchase shares.

    What it isn't is the piecemeal selling off of OpCos - before we get into the 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> not least because there are myriad different parts of the business across Europe.
     
  13. A0wen

    A0wen Established Member

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    For it to have any value as an IPO there needs to be something of a strategy and income in the medium term.

    Currently none of Arriva's franchises run beyond 2025, with the first coming up for renewal being XC next year. On that basis it may not attract the level of interest DB want.
     
  14. ivanhoe

    ivanhoe Member

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    Again, the idea of selling it off in bits will not achieve what DB requires. DB are looking to cut its overall debt so that it can concentrate on its main job. It’s been under pressure to improve performance and infrastructure in Germany. A protracted sell off of bits and pieces would not achieve its aim of cutting its debt in a timely manner.
     
  15. LNW-GW Joint

    LNW-GW Joint Veteran Member

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    I think you are looking at it just from a UK rail perspective.
    Arriva operates across much of Europe (bus and train) and those operations are probably more valuable than the UK rail franchises.
     
  16. cactustwirly

    cactustwirly Established Member

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    But Arriva has a significant presence in the Netherlands, as well as Denmark, Poland & Czech Republic!
     
  17. pdeaves

    pdeaves Established Member

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    If a sale goes ahead and depending on who the major shareholder(s) ends up being, it is presumably possible that the new owner may have to sell a subsidiary after the event. Not at this stage, though.
     
  18. smtglasgow

    smtglasgow Member

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    Have there been any examples of venture capitalists investing in transport? Their schtick seems to be loading businesses with debt while extracting any value, so possibly not the best road for Arriva to be heading down?
     
  19. Bletchleyite

    Bletchleyite Veteran Member

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    This may be true of some, but what people often forget is that a lot of these investors are actually pension funds - our pension funds. Without their ability to invest in this way, we might not have viable pensions in 30 (or whatever) years' time.

    Surprisingly many of us invest in organisations in this way without having any idea that we do, effectively!
     
  20. apinnard

    apinnard Member

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    I wonder if a certain Canadian pension fund would be interested.
     
  21. Chris217

    Chris217 Member

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    Is it just Arriva bus UK or both bus and rail in the UK?
    I recall Stagecoach doing a similar thing in London.
    Selling it to a bank,and buying it back a few years later for a song!
    Basically all the assets stayed the same but with new owners.
    Ha,like a rail franchise really.
    They have a change of management but everything else stays roughly the same.
    Would be a shame to see it all sold off.
    Makes me wonder if Arriva divulging into trains has cost them in this country.
    It's the same as MTL Trust Holdings.
    All very well on the buses until they started playing with trains.
    That was their demise.
     
  22. richw

    richw Established Member

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    Arriva and all its bits internationally, not just U.K.!
     
  23. richw

    richw Established Member

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    You’ve missed the main part. Arriva operate more than U.K. rail. DB want rid of the lot as one!
     
  24. Robertj21a

    Robertj21a Established Member

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    Everything. Arriva has a lot of bus and rail operations across Europe.
     
  25. Shaw S Hunter

    Shaw S Hunter Established Member

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    During the 1990s some of the so-called employee buyouts of then publicly owned bus companies were in fact led by venture capitalists who provided enough investment to improve the businesses before selling off their holdings, invariably to one of the big groups, at a decent profit. So yes there is a history and it doesn't have to result in a negative longer-term outcome. The one genuine attraction to investors in transport companies is a steady inward cashflow. The question now is to what extent Arriva as a group has inefficiencies that can be improved to help generate profit for any potential investors.
     
  26. ainsworth74

    ainsworth74 Moderator Staff Member Moderator

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    Due to the wide expanse of operational areas that Arriva cover, including buses and trains both in GB and overseas, and the risk of duplication from having multiple threads the Forum Staff have decided to have only one thread for the time being discussing the possible sale. This means that discussion to the implications to the bus or international operations of Arriva can be discussed on this thread. Even though this thread is not in the relevant sub-forums.

    We will keep the situation under review and will update members if there is a change in the position. Otherwise please feel free to discuss the potential implications to Arriva's operations without worry about whether it be bus, rail or international related.
     
  27. TheGrandWazoo

    TheGrandWazoo Veteran Member

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    It is everything - the press release refers to its revenues of €5.44 bn so that is everything! As an aside, Arriva do run trams as well as trains and buses, and I've even had the pleasure of using their waterbuses in Copenhagen!!

    The problem for DB is that they have invested a lot of money in buying Arriva and that debt is weighing heavily on the business whilst, at the same point, they need to invest in their German Rail infrastructure. Nothing to do with UK rail franchises.
     
  28. Gerald Fiennes

    Gerald Fiennes Member

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    Netinera.
     
  29. overthewater

    overthewater Established Member

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    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..
     
  30. MedwayValiant

    MedwayValiant Member

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    Buses in fourteen countries, trains in six, trams in Sweden, boats in Denmark, and ambulances in Britain. If Arriva is to be sold in one piece as envisaged, I think it would be the biggest sale of a transport operator in one piece in the history of the world, and one does have to wonder who would want all of it. It would be high risk precisely because it would be the biggest ever transaction of its kind, and the price would be in ten digits (in euros, although probably in pounds as well) which would place it beyond the reach of most.

    It is noted above that selling Arriva off piece by piece is not what Deutsche Bahn wants to do. But in fact, wouldn't DB do best to divest the more esoteric parts of the businesses - certainly the boats and the ambulances - before trying to sell the rest in one piece? They're probably not worth a great deal, and having to take them on board might depress the price that anyone would be willing to pay for the whole lot.

    Even if we suppose that it's ultimately only the bus and train operations that will be offered for sale, who would buy? Only a handful of transport companies could afford it, and in most cases there would be a competition issue which would inevitably lead to a protracted inquiry process. (British competition authorities just wouldn't allow Stagecoach plc to buy Arriva, Dutch competition authorities probably wouldn't allow Nederlandse Spoorwegen to, and so on.) Canadian pension funds and the like might not face that problem, but is a transport operator whose largest market is Britain a very good buy for an absentee landlord right now?

    The other option mentioned is a stock market flotation. There are arguments for London or Amsterdam as the venue for that flotation, but a bus company would be a hard sell to big investors, especially if London were chosen.
     
  31. Robertj21a

    Robertj21a Established Member

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    Surely, it will be out of the league (or interest) of the UK transport operators.

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

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