First Group: General Discussion

[Sandy Drew]

A coming-together of First UK Bus and arriva UK bus as a new business, potentially offers the synergies required for both to be successful as one, does it not - with only minor pinch point areas of overlap?

*caveat* Unsure of total market share concerns here though!

 

[In Focus]

I think you're reading that wrong.

The first line is clear "Today we announced that we will be pursuing strategic options, through a sale or other means, to separate First Bus from FirstGroup". The structural alternatives could be an outright sale to another party - this is what they are doing for Greyhound.

Alternatively, the "other means" could be that they spin First Bus off with a separate stock market listing via an Initial Public Offering (IPO).

Ok thank you for that .

 

[DragonEast]

Just find it odd that a strong emotion like hate or euphoria is experienced vicariously.

Really?? I'd have thought recent experience is that a strong emotion like hate or euphoria is more easily experienced vicariously!

 

[TheGrandWazoo]

A coming-together of First UK Bus and arriva UK bus as a new business, potentially offers the synergies required for both to be successful as one, does it not - with only minor pinch point areas of overlap?

*caveat* Unsure of total market share concerns here though!

The latter point - outside London, it would be c.30-35% so would not get through CMA.

Mind you, it is an interesting point that there are relatively few areas where First and Arriva sit cheek by jowl. West Yorkshire is the obvious one, followed by Bolton, Leicester and bits of Essex.

 

[winston270twm]

It could be a sale to NX but, as with DB flogging Arriva, they are not wanting to be bogged down with various competition issues and CMA investigations, let alone a protracted piecemeal sell off where there remains the risk of being left with stuff like Buses of Somerset. Hence why a public offering or a sale to an equity group is still the better option for both DB and for First.

Appreciate the view that the fact that Arriva is for sale might be viewed as a buyers market etc but remember... the results posted have seen the turnover remain constant (despite it being a 52 wk rather than a 53 wk year) with margins and op profits increasing markedly. There may be a limited number of transport businesses who are interested but I'm not certain that is where either Arriva nor First Bus will end up.

Many capital investment firms will look to concentrate in one or more related markets; others have a disparate set of interests. One of the latter is unfortunately Greybull Capital who, as well as having British Steel, had interests in retail, high end electronics, consumer goods etc. In the event, they can always go for an IPO and simply spin it off that way - that's the way my first employer went when it was divested from the parent group.

With First UK Bus being a single entity, NX are the only group that have little of no competition concerns. The only area is B'ham where First Worcester run the Salt Road (144/144A) along the Bristol Rd in to B'ham which could be construed as competing with NXWM.

I still my eye on Stagecoach plotting something in the background with sale of Coach USA/Megabus & Souter selling his ADL interests, more in relation to Arriva (hopefully their European ops)

An IPO of First UK Bus might be the best for First Group longer term, they would still retain majority shareholding & in the future could buy back the shares & return First UK Bus under ownership of parent First Group.

The latter point - outside London, it would be c.30-35% so would not get through CMA.

Mind you, it is an interesting point that there are relatively few areas where First and Arriva sit cheek by jowl. West Yorkshire is the obvious one, followed by Bolton, Leicester and bits of Essex.

I thought it was max 25% of the market in & outside of London ?​

 

[DragonEast]

Mind you, it is an interesting point that there are relatively few areas where First and Arriva sit cheek by jowl. West Yorkshire is the obvious one, followed by Bolton, Leicester and bits of Essex.

OK in Essex they'd need to divest a couple of small urban ops perhaps at either end of the County (to Ensign/Stephensons or Go Ahead, perhaps - or Colchester could easily transfer to Eastern Counties, and perhaps Stagecoach might even be interested in recreating the old Eastern Counties?); but I've long thought a combination of Arriva's northern home counties ops and First's Essex county ops would be a good one: there are clear synergies, not least the issues around operating in the congested commuter towns around London, which Arriva manage relatively successfully and where First have been pretty well a disaster. The big trouble may be that the local First op co pay their drivers generously, which causes problems already for their neighbours, I suspect!.

But you're right; commerce and the regulators (and commentators) look at things on a spreadsheet, not in the real world which the rest of us have to endure! (I've never quite understood what makes issues in two towns with several operators more important than those in the other half-dozen plus where a single operator has a virtual monopoly already).

 

[overthewater]

We could still see joint bid for First, like National express and Rotala? Anything is possible now.

 

[Robertj21a]

We could still see joint bid for First, like National express and Rotala? Anything is possible now.

Blinking heck !

I know it was only an example but why on earth would National Express (or anyone for that matter) want to tie up with Rotala of all people ?

 

[oldman]

Alternatively, the "other means" could be that they spin First Bus off with a separate stock market listing via an Initial Public Offering (IPO).

You don't actually need an IPO - simply hive off the UK bus business into a new company and give shares to existing shareholders. I don't see why UKBus would need new capital.

 

[F Great Eastern]

Any early guesses on what the new brand will be called for the spun off company if it is seperated?

 

[DragonEast]

You don't actually need an IPO - simply hive off the UK bus business into a new company and give shares to existing shareholders. I don't see why UKBus would need new capital.

What, just put the fleet age up again, from 17-20 or 25 years? Well I suppose free from that rubbishy EU nonsense of clean air regulation . . .

 

[overthewater]

Blinking heck !

I know it was only an example but why on earth would National Express (or anyone for that matter) want to tie up with Rotala of all people ?

I doubt Nat Express would want to give Transdev the good self, Go ahead could be another factor mainly in the east Anglia etc.

 

[winston270twm]

Blinking heck !

I know it was only an example but why on earth would National Express (or anyone for that matter) want to tie up with Rotala of all people ?

There's no way NX would even bother bidding for Rotala, due to their dominant market position in the WM, there's no way it would even get through past the CMA.

You don't actually need an IPO - simply hive off the UK bus business into a new company and give shares to existing shareholders. I don't see why UKBus would need new capital.

First UK Bus has a large deficit in it's pensions & many of it's subsidaries have not any hint of new buses for some time, with much of the 'Barbie' fleet not being refurbished internally since new, plus a number of years where majority of new buses went in to London or group orders were much lower prior to 2013 rights issue.​

 

[overthewater]

https://unitetheunion.org/news-even...-be-tolerated-by-unite-as-sell-off-announced/

Unite, Britain and Ireland’s largest union, ‘won’t tolerate a single job loss’ at First Bus, as the parent company FirstGroup announced today (Thursday 30 May) that it intended to sell-off its bus operations in the UK.

Unite has about 20,000 members working for First Bus, one of the UK’s largest bus operators.

Unite national officer for passenger transport Bobby Morton said: “I want to make it crystal clear that Unite won’t tolerate one single job loss or any attack on our members’ terms and conditions as a result of this sell-off process.

“On one hand, FirstGroup has praised staff for their hard work and commitment and then, in the next breath, it announces it is selling off First Bus because of so-called ‘limited synergies’ between the parent company and the bus operations.

“This is a slap in the face to the dedication that our members show on a daily basis in all the weathers that the British climate can throw at them.

“If any potential buyer for any of First Bus’ operations in the UK thinks that there are rich and short-term easy pickings at our members’ expense, they will need to think again.

“We regard bus services as a public service for the travelling public and not a vehicle for heavyweight corporates to squeeze the last ounce of profit from bus services.”

Unite will be holding a meeting of its First Bus reps from across the UK in London on 11 June, when First Bus executives will be in attendance.

 

[Astradyne]

What, just put the fleet age up again, from 17-20 or 25 years? Well I suppose free from that rubbishy EU nonsense of clean air regulation . . .

Trouble is the Capital raised would be retained by the remaining First US/UK Rail ... not the UK Bus spin-off. IPO or a share splitting would not be much difference as far as UK Bus in concerned ... largely depends if that is what Capital and other shareholders want as it will no doubt have to be approved by them.

 

[TheGrandWazoo]

You don't actually need an IPO - simply hive off the UK bus business into a new company and give shares to existing shareholders. I don't see why UKBus would need new capital.

True - there are a range of options and an IPO is only one.

However, there are a number of reasons (as has been stated) as to why First would need capital. The fleet age has already been pushed out, hence why elderly deckers are still working on all day service in places like Bristol. Whilst there was some new vehicle investment spread around between 2012-15, there are a number of fleets that have relied on limited new vehicle investment or non at all. The pensions deficit will also need to be addressed.

 

[Robertj21a]

Any early guesses on what the new brand will be called for the spun off company if it is seperated?

How about 'Not Worst any longer'.......

 

[Bletchleyite]

Any early guesses on what the new brand will be called for the spun off company if it is seperated?

LastBus?

In all seriousness, it'll be called whatever the marketeers come up with.

 

[richw]

Any early guesses on what the new brand will be called for the spun off company if it is seperated?

Some areas are already using brands that have lost First from the name. Kernow, and Buses of Somerset spring to mind straight away.
Both have a small sticker on their repainted vehicles on the side window near the back saying something like ‘A First company’

 

[F Great Eastern]

LastBus?

In all seriousness, it'll be called whatever the marketeers come up with.

That name has already been used to have a dig at First

When John O'Sullivan sold Aircoach to First and started up a new company a few years later, he called it Last Bus which traded as Dublin Coach, which was a clear dig!

 

[TheGrandWazoo]

LastBus?

In all seriousness, it'll be called whatever the marketeers come up with.

Penny for Moir’s thoughts on this

He’ll be probably too busy feeding his cows!

 

[oldman]

However, there are a number of reasons (as has been stated) as to why First would need capital.

They may need it, but would any investor want to provide it? Would you? I think steady incremental progress is the only way forward, unless some private equity asset stripper comes along.

 

[Simon75]

The latter point - outside London, it would be c.30-35% so would not get through CMA.

Mind you, it is an interesting point that there are relatively few areas where First and Arriva sit cheek by jowl. West Yorkshire is the obvious one, followed by Bolton, Leicester and bits of Essex.

Potteries is surounded by Arriva Midlands and Arriva North West

 

[TheGrandWazoo]

Potteries is surounded by Arriva Midlands and Arriva North West

Less so now - they used to both have depots in Crewe and Burslem but North West has largely retreated north (and many moons ago depots in Stafford too)

 

[Simon75]

Some areas are already using brands that have lost First from the name. Kernow, and Buses of Somerset spring to mind straight away.
Both have a small sticker on their repainted vehicles on the side window near the back saying something like ‘A First company’

Badgerline in Weston Super Mere. Most areas have heritage liverly of former opps (they still own a lot of former names ie PMT , S Turners (a company PMT bought out)

 

[Simon75]

Any early guesses on what the new brand will be called for the spun off company if it is seperated?

National Bus company, lol . The return of the double N

 

[Simon75]

Reading Transport have expanded into Slough (I guess they have an outstation there) so they could buy First Berkshire

 

[Surreyman]

Reading Transport have expanded into Slough (I guess they have an outstation there) so they could buy First Berkshire

A bit unlikely that the CMA would allow that!

 

[overthewater]

Im surprised the CMA would care with all the problem bus companies are facing..

 

[Mwanesh]

This is an ideal opportunity for Councils to take back buses into public ownership. First Greater Manchester would be a good starter. Perhaps the Mayor should get in early and start the ball rolling.

If First Group services are merely sold off to the likes of Stagecoach, they will still be run only on a commercial basis and the operators will charge the earth for running non-profitable services. Only by being publicly owned will the Councils be able to use income from profitable routes (of which there are many) to be used to support less profitable but nevertheless essential services.

Where have you been First Manchester was sold ti Go Ahead. GMPTE never made an offer. There is no money in buses when you factor in everything .Threat of franchising and low emmision zones that have to be met by operators. Andy Burnham has realised talking and taking buses into public ownership is not as easy as you think.There was a You Gov poll where most people who took part said there are more important issues than buses