Stagecoach Takeover Discussion

[Eyersey468]

Well certainly any that are near or within reasonable distance of a Stagecoach depot. Indeed the documents provided by @Volvodart in post #167 even contain reference to this.

Time to be worried for some current NX contractors??

NX have said there are no plans to change the current contractor system

 

[PG]

NX have said there are no plans to change the current contractor system

How does that square with the quote I gave in post #181 from the offer document from the boards of both companies??

National Express Coach utilising Stagecoach's well-located depot network to run and maintain its coach operations;

Not changing the contractor system doesn't mean all current contractors will continue as contractors.

 

[Eyersey468]

How does that square with the quote I gave in post #181 from the offer document from the boards of both companies??

Not changing the contractor system doesn't mean all current contractors will continue as contractors.

That is a fair point, however we have a Stagecoach depot in Hull and our management are not worried that we are in danger of losing our NX work. NX have said to them they do not intend to take work off us, however they will be looking to use Stagecoach depots for maintenance or in case of a breakdown etc when the coaches are out on the road

 

[Deerfold]

That is a fair point, however we have a Stagecoach depot in Hull and our management are not worried that we are in danger of losing our NX work.

Er, no. Why would they be? Surely it'd be the non-Stagecoach contractors who might worry.

 

[Eyersey468]

Er, no. Why would they be? Surely it'd be the non-Stagecoach contractors who might worry.

I work for East Yorkshire not Stagecoach, sorry I should have said there is a Stagecoach depot in Hull.

 

[Bletchleyite]

Er, no. Why would they be? Surely it'd be the non-Stagecoach contractors who might worry.

I wouldn't be surprised to see, over time, a complete flip between Megabus and NatEx, i.e. the former would become a system pretty much entirely contracted to small local coach operators, and the latter almost entirely in house from Stagecoach depots.

 

[MotCO]

Time to be worried for some current NX contractors??

Flixbus may look attractive to them as a contracter.

 

[Eyersey468]

I wouldn't be surprised to see, over time, a complete flip between Megabus and NatEx, i.e. the former would become a system pretty much entirely contracted to small local coach operators, and the latter almost entirely in house from Stagecoach depots.

From the reports I have heard the Megabus side is to be sold though Stagecoach will stay as Megabus contractors

 

[Bletchleyite]

From the reports I have heard the Megabus side is to be sold though Stagecoach will stay as Megabus contractors

Indeed, hence why I said "over time", probably as contracts expire.

 

[PG]

From the reports I have heard the Megabus side is to be sold though Stagecoach will stay as Megabus contractors

Call me a cynic but it does seem like Stagecoach are having their cake and eating it, as the "sale" of Megabus to ComfortDelGro seems just a tad too convenient...

 

[Deerfold]

Call me a cynic but it does seem like Stagecoach are having their cake and eating it, as the "sale" of Megabus to ComfortDelGro seems just a tad too convenient...

I'm not sure what you're accusing them of.

 

[johnw]

Stagecoach UK Bus has certainly lost the innovation and drive that it once had but I doubt it will change as the woman from Sky is retaining her role as MD of UK Bus in the new organisation.

 

[GusB]

Call me a cynic but it does seem like Stagecoach are having their cake and eating it, as the "sale" of Megabus to ComfortDelGro seems just a tad too convenient...

It's more than likely that the Competition and Markets Authority would have insisted that the combined group divest some of the long-distance operations anyway. Megabus is the main competitor to National Express* in England and on some cross-border services, so eyebrows would definitely be raised if both were under common ownership.

In Scotland it's a slightly different situation in that Megabus services are more or less integrated with those of Citylink rather than being in competition, but selling them off to ComfortDelgro (CDG) could potentially create new opportunities for competition between Citylink and National Express. Whether or not this will actually happen remains to be seen.

* The sale of Megabus certainly gives CDG a bigger market share, and may not appear to make much sense, but Flixbus are still trying to grab opportunities wherever they can.

Interesting times are ahead!

 

[Bletchleyite]

* The sale of Megabus certainly gives CDG a bigger market share, and may not appear to make much sense, but Flixbus are still trying to grab opportunities wherever they can.

I'm genuinely surprised it wasn't sold to Flix! I wonder how long CDG will keep it going outside Scotland, as I've long thought there probably isn't room in the market for three operators.

In Scotland it's a slightly different situation in that Megabus services are more or less integrated with those of Citylink rather than being in competition, but selling them off to ComfortDelgro (CDG) could potentially create new opportunities for competition between Citylink and National Express. Whether or not this will actually happen remains to be seen.

This is an interesting point. At present, the walk-up "Stagecoach Express" services complement Citylink, but they could well look to build on those to compete. Otherwise selling the Citylink share seems odd, as at present they don't really compete.

 

[WelshBluebird]

I'm genuinely surprised it wasn't sold to Flix! I wonder how long CDG will keep it going outside Scotland, as I've long thought there probably isn't room in the market for three operators.

I'd give Megabus a better chance a of surviving than Flix though, if nothing else due to brand awareness!

 

[Mikey C]

I'd give Megabus a better chance a of surviving than Flix though, if nothing else due to brand awareness!

They can partially thank Dara O Briain and Mock the Week for that!

 

[baza585]

I'm bemused as to why Comfort Delgro have bought the Megabus name. What's in it for them, because I can't see it being profitable for some time and they haven't bought any assets or staff.

 

[carlberry]

I'm bemused as to why Comfort Delgro have bought the Megabus name. What's in it for them, because I can't see it being profitable for some time and they haven't bought any assets or staff.

It's a recognised brand and it's up to them to make it profitable now. There are no real assets and staff would be an ongoing cost, whereas they're only stuck with whatever they're contracted for (i.e. if they've agreed to use Stagecoach vehicles or staff for a fixed amount of time). What they have is basically the same kind of marketing base that Flix have (subject to any sale restrictions on competition) and it could be that they move to the Flix approach of sharing the financial risk with any future contractors. The other possibility (once the sale completes and any restrictions expire) is that they just sell it on to Flix.

 

[ajrm]

I'm bemused as to why Comfort Delgro have bought the Megabus name. What's in it for them, because I can't see it being profitable for some time and they haven't bought any assets or staff.

Bear in mind that Megabus in Scotland is intertwined with Citylink, which Stagecoach already part-owns with Comfort Delgro, and it makes more sense.

 

[Volvodart]

It is only Megabus that is referred to in Aberdeen, there is no mention of Citylink, apart from the Gold services and the branding on a few of the coaches that are used.

 

[RT4038]

I'm bemused as to why Comfort Delgro have bought the Megabus name. What's in it for them, because I can't see it being profitable for some time and they haven't bought any assets or staff.

The value of the megabus website / booking engine?

 

[PG]

I'm not sure what you're accusing them of.

Well it doesn't exactly seem like an open sale to the highest bidder, more like a case of a quiet word in the ear of CDG to say we can't hold onto our share in the Citylink/Megabus joint venture so will you take it off our hands? And we'll carry on running it on a day-to-day basis for you.

In Scotland it's a slightly different situation in that Megabus services are more or less integrated with those of Citylink rather than being in competition, but selling them off to ComfortDelgro (CDG) could potentially create new opportunities for competition between Citylink and National Express. Whether or not this will actually happen remains to be seen.

Who knows if there are, ahem, unwritten conditions to the sale

 

[Deerfold]

Well it doesn't exactly seem like an open sale to the highest bidder, more like a case of a quiet word in the ear of CDG to say we can't hold onto our share in the Citylink/Megabus joint venture so will you take it off our hands? And we'll carry on running it on a day-to-day basis for you.

Why does it have to be an open sale to the highest bidder?

 

[baza585]

Why does it have to be an open sale to the highest bidder?

Stagecoach directors have a duty to maximise value to their shareholders.

I guess in this instance they may feel maximising value overall is via getting rid of Megabus as an impediment to the sale to National Express.

 

[TheGrandWazoo]

Well it doesn't exactly seem like an open sale to the highest bidder, more like a case of a quiet word in the ear of CDG to say we can't hold onto our share in the Citylink/Megabus joint venture so will you take it off our hands? And we'll carry on running it on a day-to-day basis for you.

Who knows if there are, ahem, unwritten conditions to the sale

Relatively few sales do go out to the open market. The sale of Xplore Dundee was done on the quiet. So was First London, as was the sale of Stagecoach London AND its subsequent repurchase. Not everything is an auction.

As for unwritten conditions for sale... not being naive but the CMA will be all over this deal.

 

[Kremlin Stooge]

Well it doesn't exactly seem like an open sale to the highest bidder, more like a case of a quiet word in the ear of CDG to say we can't hold onto our share in the Citylink/Megabus joint venture so will you take it off our hands? And we'll carry on running it on a day-to-day basis for you.

Who knows if there are, ahem, unwritten conditions to the sale

Why does it have to be an open sale to the highest bidder?

Stagecoach directors have a duty to maximise value to their shareholders.

I guess in this instance they may feel maximising value overall is via getting rid of Megabus as an impediment to the sale to National Express.

Maybe they sold to the only bidder? The industry is not exactly awash with cash at the moment, perhaps CDG offered a price that most closely matched Stagecoach’s internal valuation of the businesses.

 

[RT4038]

Maybe they sold to the only bidder? The industry is not exactly awash with cash at the moment, perhaps CDG offered a price that most closely matched Stagecoach’s internal valuation of the businesses.

Taking into account the value of the sub-contracting business going forward. After all, Stagecoach wouldn't want to be left with that kind of quantity of express coaches not really suited to the remaining local bus operations. Flixbus wouldn't be interested in the Stagecoach rolling stock, nor wish to pay Stagecoach prices as a contractor (who I expect wouldn't want to, and possibly not be able to take commercial risk as part of the divestment terms). Who else really might be interested?

All this conspiracy theory is stretching things a bit far......

 

[Mwanesh]

Comfort Delgro can run some services from London or Cardiff. They have depots in there. The Falcon fits as connecting service.

 

[tbtc]

We've had roughly fifteen years of peaceful operation between Megabus/ Stagecoach Express/ Citylink in Scotland (e.g. Stagecoach have changed their services from the days when the X24/X54 provided a competitive journey time and hourly frequency from Dundee to Glasgow/ Edinburgh, but at the same time filled in gaps to allow other Citylink services to be speeded up like the X56 at Kinross - the boundaries between Citylink/Stagecoach have shifted a little in the Highlands)

So it may be that Stagecoach would rather sell to a company they trust, one that they've had a co-operative working relationship with, why risk a sale on the open market for the sake of a couple of quid extra, when this could damage stable networks and result in some messy competition?

It wouldn't take much for Stagecoach to hit Citylink where it hurts (e.g. the "fast" services from Glasgow/ Edinburgh through Cupar could be diverted to Dundee instead of St Andrews, the X7 could be extended south/west of Perth), or for CDG to undercut National Express, so there's maybe a symbiotic situation where it suits both organisations to maintain peace - there doesn't need to be any "collusion", just an environment where both companies know that it's not worth risking anything

 

[mbonwick]

I think a potted history of Scottish Citylink would probably answer a lot of the confusion on this thread.

By 1997 it had ended up in the hands of National Express (100% ownership), which was fine until NX won the Scotrail franchise - at which point the Monopolies & Mergers Commission ordered it to be sold off (NX having a monopoly on public transport between most of the major cities). So, Citylink was sold to ComfortDelGro (again, 100% ownership).

Stagecoach then gained a 35% stake in 2005, as part of the deal to expand Megabus in Scotland and work with Citylink rather than directly competing - this included giving Citylink access to some cross-border Megabus services. Indeed, operationally there is a sub-section of Megabus (Megabus JV) that's involved with all the joint routes. Incidentally, the MMC also got involved in this tie-up, which is why some routes were sold to Parks of Hamilton.

So, the sale of a minority stake in a Joint Venture back to its original owner, along with a wider network of interconnecting and similar style routes is hardly surprising - to me at least.