First Group: General Discussion

[winston270twm]

I think First group might be willing to do lots if not then Nat express really will have to line up buyers. Why dont you think First dont want to sell off parts?

Selling off small parts isn't going to 'boost shareholder value that they keep quoting'

Even the £100 million UK Bus Disposals did little or nothing. It will need to be something big!

 

[Robertj21a]

I think First group might be willing to do lots if not then Nat express really will have to line up buyers. Why dont you think First dont want to sell off parts?

First Group are on record, even in the T O'T era, as saying that *any* part of First Bus could be sold. Needless to say, nobody else was sufficiently interested in pursuing any part (except Manchester, which still fell through). If parts are to now get sold off they won't achieve very much to help the balance sheet.

 

[winston270twm]

First Group are on record, even in the T O'T era, as saying that *any* part of First Bus could be sold. Needless to say, nobody else was sufficiently interested in pursuing any part (except Manchester, which still fell through). If parts are to now get sold off they won't achieve very much to help the balance sheet.

Who was originally lined up for Manchester?

 

[jonesy3001]

Who was originally lined up for Manchester?

Wasn't stagecoach after the bolton and oldham depots?

 

[TheGrandWazoo]

Wasn't stagecoach after the bolton and oldham depots?

There were various, spurious rumours at various times. Like Winston, I'm not aware that there was a definite deal on the table and, also, I don't see piecemeal disposals etc. Flogging Potteries to Julian Peddle or Leicester to Wellglade is frankly faffing about at the edges; as Winston says, if Hauser is to deliver true shareholder value, it'll probably demand something much more fundamental.

 

[Dentonian]

Wasn't stagecoach after the bolton and oldham depots?

They wouldn't be allowed to take over Oldham as it would give them a near monopoly. Presumably they wouldn't want to expand in GM whilst Bus Reform is pending anyway. Far more likely to be Rotala als or HCT if anyone.

 

[Robertj21a]

Who was originally lined up for Manchester?

Clearly I thought it was more general knowledge. Probably better if I kept quiet for a bit longer.

 

[winston270twm]

There were various, spurious rumours at various times. Like Winston, I'm not aware that there was a definite deal on the table and, also, I don't see piecemeal disposals etc. Flogging Potteries to Julian Peddle or Leicester to Wellglade is frankly faffing about at the edges; as Winston says, if Hauser is to deliver true shareholder value, it'll probably demand something much more fundamental.

Agreed TGW!

Any disposal will need to bid, something that is holding back the rest of the group / some that can raise a large amount to pay down debt. I.e. Greyhound / UK Bus or even split off the UK / US ops & do a partial float on NYSE to raise funds.

 

[oldman]

I don't know why NX would want to invest in the UK stage bus market at a time when almost everyone is trimming. There are a few attractive city operations, but First would surely not want to sell them in isolation, and it would need a lot of management effort to take on the whole business.

Looking at the NX half-yearly, these look like the sort of things to invest in, not UK bus:

• We have made 7 acquisitions in the period: 3 in ALSA and 4 in North America, consolidating our presence in existing core markets and expanding in to growth segments.
• In July we won a significant 500 bus contract in Rabat, Morocco. We are now the largest public transport operator in Morocco.
• Our new Geneva, Switzerland operations have grown very strongly, with our first acquisition – AlpyBus – growing revenue by 26.3% and profit by 33% in the first half. New summer tourist services have been launched.
• Significant expansion in US charter and UK employee shuttle services, with new opportunities secured in the rapidly-growing Spanish cruise ship and urban minicab markets.
• A new on-demand bus service due to start shortly in the West Midlands.

 

[winston270twm]

Clearly I thought it was more general knowledge. Probably better if I kept quiet for a bit longer.

Are you referring to the proposed Rotala Manchester acquistion? Announced the same time as Hotel Hoppa?

 

[Volvodart]

Deleted by below

 

[Volvodart]

I don't know why NX would want to invest in the UK stage bus market at a time when almost everyone is trimming. There are a few attractive city operations, but First would surely not want to sell them in isolation, and it would need a lot of management effort to take on the whole business.

Looking at the NX half-yearly, these look like the sort of things to invest in, not UK bus:

They may be interested in some of the US operations.

 

[winston270twm]

I don't know why NX would want to invest in the UK stage bus market at a time when almost everyone is trimming. There are a few attractive city operations, but First would surely not want to sell them in isolation, and it would need a lot of management effort to take on the whole business.

Looking at the NX half-yearly, these look like the sort of things to invest in, not UK bus:

Because they are even managing to grow turnover & profits even in the toughUK market. The likes of Glasgow / West Yorkshire / Bristol etc are all similar operating characteristics as NXWM i.e. Urban / high frequency City routes.

 

[winston270twm]

They may be interested in some of the US operations.

They may struggle to purchase First's US operations, due to NX being 2nd biggest school bus operator already behind First Student.

 

[Volvodart]

I was thinking Transit.

 

[overthewater]

Clearly I thought it was more general knowledge. Probably better if I kept quiet for a bit longer.

I think your the only one that knows and you keep on saying it.

Because they are even managing to grow turnover & profits even in the toughUK market. The likes of Glasgow / West Yorkshire / Bristol etc are all similar operating characteristics as NXWM i.e. Urban / high frequency City routes.

Certain parts of First would be grab bolt ons to Nat Express, Aberdeen and Glasgow would fit right in with Dundee and would be easy to have just single manager for the three.

Does Nat Express have the cash to buy a good chunk of First bus without it causing a First group or Toys R us? IE sandal with debt after doing such a business deal...

 

[oldman]

Because they are even managing to grow turnover & profits even in the toughUK market. The likes of Glasgow / West Yorkshire / Bristol etc are all similar operating characteristics as NXWM i.e. Urban / high frequency City routes.

But, as I said, First are unlikely to sell the UK bus crown jewels and keep the rest.

Personally, I think the interview was just a throwaway remark - no question of buying First as a whole, might be interested in bits of it. The other big operators would probably think the same, even if they didn't say it out loud.

 

[Robertj21a]

Are you referring to the proposed Rotala Manchester acquistion? Announced the same time as Hotel Hoppa?

No, I wasn't
.

 

[DragonEast]

So as First look more than ever like a zombie company, living hand to mouth; why does anyone else have to do anything but wait until the fall out drops into their lap? Why throw good money after bad? Leave that to First.

 

[overthewater]

Look at West Lothian...... But it impossible to take over places like Glasgow etc

 

[Robertj21a]

Look at West Lothian...... But it impossible to take over places like Glasgow etc

Why ? - you just buy it.

 

[overthewater]

Why ? - you just buy it.

That was my point. For place like Glasgow, Leeds or York it's just simpler to buy those places. Although Lothian are hopping to force them out, but can't even get it's own house in order. I can't think of anyone else expect rosco in bury.

 

[Kahuna47]

I can't think of anyone else expect rosco in bury.

Rosso/Transdev are one of the many people mooted to take over somewhere. It's widely believed that if First GM are sold it won't be a job lot - each depot will have its price.

As for potential buyers, theres a different company each week lined up. From the big guys (Stagecoach, Arriva, Go Ahead, NatEx etc) right down to the smaller players (in this country at least) such as RATP, Transdev, Transit Systems and Rotala.

As always, its all just talk and what ifs - but with the scare from the Americans it really does make it all seem plausible.

K

 

[winston270twm]

But, as I said, First are unlikely to sell the UK bus crown jewels and keep the rest.

Personally, I think the interview was just a throwaway remark - no question of buying First as a whole, might be interested in bits of it. The other big operators would probably think the same, even if they didn't say it out loud.

There would be nothing stopping First selling all of UK Bus to NX, then NX dispose of the bits what they don't want. NX is in the unique position of only having a small percentage of the UK Bus market with little overlap between existing NX & First Bus ops + their CEO is ex First group. Stagecoach will struggle to buy much more of First without attracting interest from competition authorities, Arriva (DB aren't interested in expanding UK Bus & have their own debt issues), even Go-Ahead compete / overlap in a number of areas.

 

[winston270twm]

That was my point. For place like Glasgow, Leeds or York it's just simpler to buy those places. Although Lothian are hopping to force them out, but can't even get it's own house in order. I can't think of anyone else expect rosco in bury.

Not always as easy 'as just buying it' depends if it's for sale / if the asking price is realistic or the acquiring could be forced to overpay

 

[Surreyman]

Not always as easy 'as just buying it' depends if it's for sale / if the asking price is realistic or the acquiring could be forced to overpay

Let's not forget the CMA, It's not too difficult to figure out who would not be allowed to buy what.
I don't think First are in a very favourable position to sell, much of UK Bus would not appeal to the major groups at what might be considered 'An Acceptable Price' (Sure you can sell anything if the price is right, even a negative value) but all of First UK Bus subsidiaries are going to have a basic 'book' value (Vehicles, property equipment) plus 'Goodwill' etc.
As many posters have stated, what would be the point of selling off the 'Earners' - Leicester etc?
I suspect we are likely to see 'more of the same' possibly cranked up now that O'Toole has departed, what I mean by this is, ongoing cost cutting, route/frequency/pvr trimming, minimal Cap-Ex (minimum new vehicles) Even some more Depot closures.
Much will depend on the future economy, there are lot of unknowns, Brexit, Oil prices, personal taxation, LEZs, car ownership/running costs.

 

[TheGrandWazoo]

Let's not forget the CMA, It's not too difficult to figure out who would not be allowed to buy what.
I don't think First are in a very favourable position to sell, much of UK Bus would not appeal to the major groups at what might be considered 'An Acceptable Price' (Sure you can sell anything if the price is right, even a negative value) but all of First UK Bus subsidiaries are going to have a basic 'book' value (Vehicles, property equipment) plus 'Goodwill' etc.
As many posters have stated, what would be the point of selling off the 'Earners' - Leicester etc?
I suspect we are likely to see 'more of the same' possibly cranked up now that O'Toole has departed, what I mean by this is, ongoing cost cutting, route/frequency/pvr trimming, minimal Cap-Ex (minimum new vehicles) Even some more Depot closures.
Much will depend on the future economy, there are lot of unknowns, Brexit, Oil prices, personal taxation, LEZs, car ownership/running costs.

Some fair points.

It's all well and good flogging stuff off but, as you say, flogging off at a discount then has to be reflected in a balance sheet hit and so another loss. As regards UK Bus, it will be a programme of further trimming and some depot closures (I can think of a few that I think are vulnerable) but then again, that is also reflected in the behaviour of Stagecoach and, to an extent, Arriva and Go Ahead.

However, getting a few million here and there is really barely scratching the surface. As Winston says, it probably needs something more fundamental like a US/UK split, spin the US bit off with a separate listing, realise some value for the shareholders and pay some more of that debt down.

 

[overthewater]

What if flogging them off cheaper saves money ie the amount in pay off etc is outweighed? I still think is possible nat Express could do a job lot and we could guess who could get what from the parts its unlikely Nat Express would want to keep: IE Cornwall, Somerset, Berkshire, Essex, Central Scotland. How do we know any of this is actually true, He could have been making off the cuff remarks

 

[Surreyman]

What if flogging them off cheaper saves money ie the amount in pay off etc is outweighed? I still think is possible nat Express could do a job lot and we could guess who could get what from the parts its unlikely Nat Express would want to keep: IE Cornwall, Somerset, Berkshire, Essex, Central Scotland. How do we know any of this is actually true, He could have been making off the cuff remarks

National Express would need to be convinced that they were buying First UK bus for an absolute bargain price (assuming their board would agree to signing it off, which all the reports seem to indicate that they wouldn't).
Results of a theoretical Sale: -
1. First Group would be seen as doing a terrible deal, selling below value, the share price would fall through the floor.
2. National Express would be responsible for a load of poor performing bus companies with huge liabilities and a potentially horrendous future redundancy bill.
3. The Pension Issue, would any buyer be stupid enough to take on the pension liabilities for UK bus?
Would First retain the Pension liabilities for all the staff moving to the new owner (up to date of sale)? (The City would hate this).
Would the Government, CMA, Pension Protection fund, make stipulations about long term pension liabilities? (they appear to allow sale & TUPE of parts of businesses/staff).

 

[overthewater]

You would bundal off the pension debt into a hedge fund and sell off the bad debt, and those people would default and thats how we get another crash ......