Worst Purchase/ Takeover/ Acquisition

[tbtc]

Since deregulation there have been a number of takeovers as First/ Stagecoach/ Go-Ahead/ Arriva etc grew - some of which were straight from the Government sell-off, some of which were independent companies, some of which were mergers, but the companies grew and grew.

But what were the worst purchases/ takeovers/ acquisitions?

There were some that seemed a bit "fringe" (Arriva's ex-Clydeside operations, National Express buying Tayside Travel), but maybe these were a good idea at the time in the expectation that there would be other purchases nearby)

There were some that were sold on afterwards (Stagecoach lasted a dozen years in East Lancashire before selling to Blazefield, and a dozen years in London before selling to Macquarie - I'm sure m'learned Forum members will point out some much shorter tenures!), but some of these may still have been good deals at the time (e.g. the Australians offered Stagecoach a lot of money for the London operations)...

...there were some where the business was affected by events out of the hands of the bus company (you could argue that the ex-Lowland Scottish operations in the Borders were hit by the Tweedbank railway removing the lucrative monopoly on the X95 corridor - the same with the ex-GM North routes from Bury/ Rochdale/ Oldham into Manchester once the tram came along)...

...there are some where a business looked good but was badly managed/ didn't get invested in/ council didn't invest in bus lanes or slashed subsidies/ industrial relations and strikes killed off a chunk of demand/ the company lost out in a "bus war" (Eastern Scottish seemed a good investment at the time IMHO but has dwindled away for various reasons) - there were also examples where a company bought a medium sized operation that included some "good" and some "bad" bits

So, which purchases looked bad at the time and which seemed a good bet at the time but subsequently turned out to be a lot worse than they initially looked?

 

[A0wen]

I think London Country NE was a basket case which AJS bought because it was available - the AJS "empire" didn't last long.

I might also question some of First's acquisitions - I never understood why GRT bought Northampton Transport or Badgerline took Potteries. Not obvious "good fits" with their respective businesses.

 

[Flange Squeal]

Stagecoach purchased the well regarded Norfolk Green operator in late 2013, with I believe around 70 vehicles. Less than five years later, Stagecoach closed the Kings Lynn depot and retained just a handful of routes which were moved to other depots. Three year old Lynx took on some of the withdrawn routes, gaining even more later on when Stagecoach withdrew some of the routes they had initially retained at other depots.

Another Stagecoach acquisition was in late 2011, consisting of the Hampshire-based 20+ vehicle Fleet Buzz operation. After gaining some work following the demise of Countryliner (and its varied associations), within just three and a bit years the network had reduced almost unbelievably drastically. The Crondall depot was closed, operations merged with the main local Stagecoach operation, and the mere handful of vehicles by then needed to maintain PVR operated out of the existing Aldershot or Basingstoke depots. I understand this was primarily due to what was a highly subsidised network having its funding completely pulled by Hampshire County Council.

 

[Andyh82]

Isn’t First buying Southern National/Red Bus a fairly famous one, very thin territory that First just gradually ran down over a period

I don’t know how much Transdev paid for Blackburn Transport, but the network was subsequently pretty much all withdrawn with only 1-2 routes (depending on how you look at it) still existing

 

[TheGrandWazoo]

I might also question some of First's acquisitions - I never understood why GRT bought Northampton Transport or Badgerline took Potteries. Not obvious "good fits" with their respective businesses.

They were excellent businesses. Potteries turned in a profit in 1994 (when Badgerline bought it) of £6m on a £25m turnover and wasn't a small business then with c.500 vehicles. Northampton Transport had the highest margin of any UK bus company, I seem to recall. As in the original post, there were a number of very good businesses that First bought and fundamentally mismanaged them, like SMT. That doesn't make them a bad acquisition. Same with Cowie purchasing British Bus and various subsidiaries such as London & Country that, aside from Guildford, have now disappeared as they have cocked things up.

Other lousy purchases were Arriva buying various Status Group operations like TGM and Classic Coaches. Or indeed any Arriva Midlands purchase; Wardle/D&G sold back to D&G after 4 years, Midland bought 2012 and sold to Rotala in 2017, and as for the former Stevensons business.... However, if that's bad, what about the spending spree that created Veolia, and a series of spectacularly poorly run islands of operation, most notably in South Wales.

The purchase of Cawlett by First though was absolutely mental - just adding dots on the map (turnover is vanity, profit is sanity), especially when they were already struggling to swallow the acquisitions in preceding years and give them the investment they needed. Of course, the worst purchase (albeit a foreign one) was First's purchase of Laidlaw; catalyst for all the problems that then ensued.

 

[carlberry]

Surely Macquarie Bank must outclass everything else, how to turn £263m into £52m!

https://www.standard.co.uk/business/stagecoach-back-on-london-buses-in-ps52-8m-deal-6524894.html

One of London's biggest bus companies today buckled under the weight of its own debt and collapsed into administration only to be bought immediately by its one-time owner Stagecoach.
The acquisition of the East London Bus Group marks Stagecoach's return to the London bus market. It sold the operator of the Selkent, Thameside and East London bus brands to Australian bank Macquarie for £263 million four years ago, only to buy it from the adminstrator KPMG today for £52.8 million.

 

[overthewater]

It had to be First buying (pick one) Strathclyde buses / Eastern Scottish / Midland Bluebird. That led to all those government controls and rules being implemented, and after 15 years we ended up with a mess. Only now have they managed to turn the corner but First had to trim so much. You have to wonder if there had been forced to sell a depot or 2 back in the late 90s would it have been better for everyone?

I don’t know how much Transdev paid for Blackburn Transport, but the network was subsequently pretty much all withdrawn with only 1-2 routes (depending on how you look at it) still existing

Not many people seem to realise this point.

 

[Andyh82]

Yes Veolia was quite strange, from nothing to a random selection of loads of companies, to nothing again in the space of only a few years

Who was that other firm who bought up a few companies, including Tates of Barnsley, and then folded a few years later?

 

[mbonwick]

Who was that other firm who bought up a few companies, including Tates of Barnsley, and then folded a few years later?

Island Fortitude, Inc.
Think the name and hindsight make it obvious they never really intended or cared about running buses...

 

[DunsBus]

It had to be First buying (pick one) Strathclyde buses / Eastern Scottish / Midland Bluebird. That led to all those government controls and rules being implemented, and after 15 years we ended up with a mess. Only now have they managed to turn the corner but First had to trim so much. You have to wonder if there had been forced to sell a depot or 2 back in the late 90s would it have been better for everyone?



Not many people seem to realise this point.

Don't forget Lowland, which First (GRT as was) bought soon after taking over SMT. That was the start of the rot as within 18 months SMT, as an opco, was no more even if bus fleetnames in the Edinburgh area suggested otherwise. Then there was the creation of First Edinburgh a few years later with an operating area stretching from Balfron to Berwick. Good on paper, bad in practice.
With the benefit of hindsight, the Monopolies and Mergers Commission should have stuck to their guns back in 1997 and ordered First to sell off Midland Bluebird along with one of the Glasgow depots - what subsequently happened, with the constant trimming and changes of MD at First Edinburgh/Scotland East was the result of First getting too big for its boots.

 

[CN04NRJ]

It had to be First buying (pick one) Strathclyde buses / Eastern Scottish / Midland Bluebird. That led to all those government controls and rules being implemented, and after 15 years we ended up with a mess. Only now have they managed to turn the corner but First had to trim so much. You have to wonder if there had been forced to sell a depot or 2 back in the late 90s would it have been better for everyone?



Not many people seem to realise this point.

They may have turned a corner but seem to have done a 180 degree turn in the last 2 years...

As for Veolia Cymru, virtually all the Bebbs business ended up with their former next door neighbour Edwards (the 100/400 and all NatEx work) and the majority of the Pontypridd work back with the Jones family after a period of competition.

 

[Dai Corner]

I believe Phil Anslow of Varteg near Pontypool in south Wales has twice sold out to Stagecoach and returned to compete with them. He currently runs commercial, tendered and school services alongside tours and private hire.

I guess that's good for him but not so good for Stagecoach who have paid out money but still have a competitor.

 

[tbtc]

I think London Country NE was a basket case which AJS bought because it was available - the AJS "empire" didn't last long

I don't know that story, but there were certainly some acquisitions that seemed to be as much about "buying it because it was available" or even "buying it to make us too big for anyone else to easily buy" than "strategic fit"

Stagecoach purchased the well regarded Norfolk Green operator in late 2013, with I believe around 70 vehicles. Less than five years later, Stagecoach closed the Kings Lynn depot and retained just a handful of routes which were moved to other depots. Three year old Lynx took on some of the withdrawn routes, gaining even more later on when Stagecoach withdrew some of the routes they had initially retained at other depots

I'd forgotten about that - shame as Norfolk Green seemed to be a well run local operator (some of the companies bought over don't seem a huge "loss", but Nofolk Green seemed better than the average bus company)

They were excellent businesses. Potteries turned in a profit in 1994 (when Badgerline bought it) of £6m on a £25m turnover and wasn't a small business then with c.500 vehicles. Northampton Transport had the highest margin of any UK bus company, I seem to recall. As in the original post, there were a number of very good businesses that First bought and fundamentally mismanaged them, like SMT. That doesn't make them a bad acquisition

Having recently read "The Region's Favourite" ("the story of South Yorkshire Transport and Mainline 1986 to 1998"), I'd add Mainline to the list of companies that looked a good acquisition at the time that First haven't looked after - any ex-PTE operation struggled with the transition to private company - most '90s bus companies needed a bit of bringing up to shape - but Mainline was never high up the pecking order in terms of First's priorities

However, if that's bad, what about the spending spree that created Veolia, and a series of spectacularly poorly run islands of operation, most notably in South Wales

Veolia was a weird one - we had them in South Yorkshire (there's always been a company who hoover up tenders - it was once Don Valley, then Veolia, then TM Travel then Tates/ Sheffield Community Transport, now Powells), but I could never understand the Veolia business model - it was all pretty modern kit that they operated but with no margins on tenders fairly thin and commercial services to back them up if they ever lost any of the subsidised services I don't know what the long term goal was (other than to hope that someone would pay a premium to buy them up to stifle competition?)

Surely Macquarie Bank must outclass everything else, how to turn £263m into £52m!

https://www.standard.co.uk/business/stagecoach-back-on-london-buses-in-ps52-8m-deal-6524894.html

Amazing work!

Don't forget Lowland, which First (GRT as was) bought soon after taking over SMT. That was the start of the rot as within 18 months SMT, as an opco, was no more even if bus fleetnames in the Edinburgh area suggested otherwise. Then there was the creation of First Edinburgh a few years later with an operating area stretching from Balfron to Berwick. Good on paper, bad in practice.
With the benefit of hindsight, the MMC should have stuck to their guns back in 1997 and ordered First to sell off Midland Bluebird along with one of the Glasgow depots - what subsequently happened, with the constant trimming and changes of MD at First Edinburgh/Scotland East was the result of First getting too big for its boots.

It was surprising that First were able to hold the successor companies to Lowland Scottish, Eastern Scottish, Midland Scottish, Kelvin Scottish, Central Scottish and Strathclyde Buses , giving them a virtual monopoly from the English border to Loch Lomond with the exception of around Edinburgh - given that South Yorkshire Transport had a long "monopoly" enquiry after buying up a couple of Sheffield independents - and then Stagecoach were forced to sell their 20% share in Mainline (because they also operated some services into South Yorkshire from East Midlands Motor Services - so Sheffield was too big and important a market for one company to have significant power over but it was fine for First to run the majority of buses in the Central Belt

Similarly, Arriva had to divest a depot in Liverpool, Stagecoach had to give up on Preston, yet the Scottish market was fine for First to dominate without needing to sell anything off (obviously they had restrictions on cutting routes, but that was nothing like as onerous as the conditions that other companies had to sign up to)

 

[ZJ517]

I'd forgotten about that - shame as Norfolk Green seemed to be a well run local operator (some of the companies bought over don't seem a huge "loss", but Nofolk Green seemed better than the average bus company)

Norfolk Green was indeed a very well run operator, it actual won the UK Bus Operator of the Year and Independent Operator of the Year back in 2010. From memory the owner had some connections with Stagecoach and sold it to them when he realised he could not carry on for personal reasons.

I happened to live locally for 5 years on either side of the transition and how quickly things went downhill beggars belief. Norfolk Green ran a very decent town service network within King's Lynn, much better than a lot of towns of similar size - when I moved there in late 2010, they even operated local services well into very late evenings that are timed with the arrival of trains from King's Cross. Once Stagecoach came into town, the local services were very much butchered progressive. It is such a shame, and disgrace I would say, how quickly a well run company fell from grace in such a short spell of time.

 

[hst43102]

The ex Yorkshire Traction operations in the Halifax/Huddersfield area come to mind. Sold to Stagecoach in 2004, sold again to Centrebus in 2009ish?, then to Arriva and now Transdev - a mere shadow of its former self.

 

[fgwrich]

Stagecoach purchased the well regarded Norfolk Green operator in late 2013, with I believe around 70 vehicles. Less than five years later, Stagecoach closed the Kings Lynn depot and retained just a handful of routes which were moved to other depots. Three year old Lynx took on some of the withdrawn routes, gaining even more later on when Stagecoach withdrew some of the routes they had initially retained at other depots.

Another Stagecoach acquisition was in late 2011, consisting of the Hampshire-based 20+ vehicle Fleet Buzz operation. After gaining some work following the demise of Countryliner (and its varied associations), within just three and a bit years the network had reduced almost unbelievably drastically. The Crondall depot was closed, operations merged with the main local Stagecoach operation, and the mere handful of vehicles by then needed to maintain PVR operated out of the existing Aldershot or Basingstoke depots. I understand this was primarily due to what was a highly subsidised network having its funding completely pulled by Hampshire County Council.

Yes, I too remember Countryliner / Fleet Buzz. They did have some bizarre operations and routes, but also some useful ones too. For example, since their demise you can't take a bus out to Fleet / Farnborough / Farnham from Basingstoke and some of the areas in-between (although you do have a perfectly good rail service, the bus did serve some of the small towns and villages not connected by rail, eg Hartley Witney. That said, a number of the stagecoach services in the area have also since met their demise too - the 200 from Basingstoke to Camberley, laterally Farnborough is also now long gone too.

 

[Citistar]

I would nominate the purchase by Stagecoach of Cooks Coaches (Landylines) who had an extensive operation of tendered work around Somerset and in to Devon. From memory, i think Stagecoach bought it primarily to prevent First from buying it, but in truth it wouldn't have been a good fit for either. Stagecoach tried to apply their usual style of operation to it, and in fairness did invest a fair sum in new vehicles, but the result was a shambolic mess which soon fell apart. Many routes got withdrawn completely. Others passed to First, Hatch Green and South West Coaches. I'm struggling to think of a single route they would have taken over from Cooks that they're still running.

 

[aswilliamsuk]

I don't know that story, but there were certainly some acquisitions that seemed to be as much about "buying it because it was available" or even "buying it to make us too big for anyone else to easily buy" than "strategic fit"

AJS were not alone in basically being asset strippers in the early days of privatisation. As I recall, they sold and leased back most of the depots and land, and made a killing on that - then everything else withered on the vine, had minimal investment and was then sold on. Someone made a lot of money, and it sure as hell wasn't the operator itself, I suspect...

Stagecoach did that, too, with a number of early purchases (the Southampton depot of Hampshire Bus springs to mind).

 

[hst43102]

I would nominate the purchase by Stagecoach of Cooks Coaches (Landylines) who had an extensive operation of tendered work around Somerset and in to Devon. From memory, i think Stagecoach bought it primarily to prevent First from buying it, but in truth it wouldn't have been a good fit for either. Stagecoach tried to apply their usual style of operation to it, and in fairness did invest a fair sum in new vehicles, but the result was a shambolic mess which soon fell apart. Many routes got withdrawn completely. Others passed to First, Hatch Green and South West Coaches. I'm struggling to think of a single route they would have taken over from Cooks that they're still running.

They closed the depot in Chard and (I think!) have no operations whatsoever in Somerset now.

 

[DunsBus]

AJS were not alone in basically being asset strippers in the early days of privatisation. As I recall, they sold and leased back most of the depots and land, and made a killing on that - then everything else withered on the vine, had minimal investment and was then sold on. Someone made a lot of money, and it sure as hell wasn't the operator itself, I suspect...

Stagecoach did that, too, with a number of early purchases (the Southampton depot of Hampshire Bus springs to mind).

By far the worst when it came to asset-stripping was British Bus. Now, they were cowboys of the highest order. Their idea of fleet renewal was taking the newest vehicles from acquired fleets and sending them elsewhere, with elderly vehicles transferred in as replacements and I remember that they almost ran Edinburgh Transport into the ground during its brief spell in their ownership.

The other thing I recall about British Bus was its endless restructuring; the reason for which - a good number of brown envelopes between the British Bus CEO and a banker at the Bank of Boston, over a period of several years - soon became apparent after the sale to Cowie. Justice was done in the end when the relevant guilty parties were both sent down.

 

[duncanp]

Norfolk Green was indeed a very well run operator, it actual won the UK Bus Operator of the Year and Independent Operator of the Year back in 2010. From memory the owner had some connections with Stagecoach and sold it to them when he realised he could not carry on for personal reasons.

I happened to live locally for 5 years on either side of the transition and how quickly things went downhill beggars belief. Norfolk Green ran a very decent town service network within King's Lynn, much better than a lot of towns of similar size - when I moved there in late 2010, they even operated local services well into very late evenings that are timed with the arrival of trains from King's Cross. Once Stagecoach came into town, the local services were very much butchered progressive. It is such a shame, and disgrace I would say, how quickly a well run company fell from grace in such a short spell of time.

I remember Norfolk Green from using them to travel to Walsingham.

Most services ran hourly on Mondays - Saturdays, and particularly impressive was the way they were timed to connect at Oak Street in Fakenham.

I would get the bus from Kings Lynn to Fakenham, and you could be sure it would connect with the bus from Fakenham to Walsingham.

There was a reasonably priced all day ticket which covered all the journeys.

I also remember Fleet Buzz, given that my father and grandmother used to live in Church Crookham.

Their ashes are both scattered in the churchyard there, and if I want to go and visit, I have to make use of whatever service Stagecoach condescend to operate at the moment.

The current offering, Route 10 (Farnborough - Church Crookham) is a joke. It doesn't connect very well with the trains at Fleet, there is a two and a half hour gap in the service on Monday - Friday afternoons (because buses and staff are needed for school services, I believe), and due to roadworks the current temporary timetable has services running every two hours on Saturdays.

There are no buses at all in Fleet during the evenings and on Sundays.

Such irregular and unreliable services are not going to encourage people to use buses.

I usually just give up and take a taxi from Fleet station now, at a cost of £10 each way.

 

[cnjb8]

Has anyone mentioned TM Travel (the Sheffield one, not the North East one)? Wellglade took it over and really run it in to the ground.

 

[Lynford1976]

By far the worst when it came to asset-stripping was British Bus. Now, they were cowboys of the highest order. Their idea of fleet renewal was taking the newest vehicles from acquired fleets and sending them elsewhere, with elderly vehicles transferred in as replacements and I remember that they almost ran Edinburgh Transport into the ground during its brief spell in their ownership.

The other thing I recall about British Bus was its endless restructuring; the reason for which - a good number of brown envelopes between the British Bus CEO and a banker at the Bank of Boston, over a period of several years - soon became apparent after the sale to Cowie. Justice was done in the end when the relevant guilty parties were both sent down.

Excellently put. I don't believe Arriva have completely left that legacy behind to this day.

 

[fgwrich]

Excellently put. I don't believe Arriva have completely left that legacy behind to this day.

No, nor do i. Haven't they removed a lot of the newer vehicles in the recent sale of the Tamworth Business (Wasn't that formerly Chase Buses?).

 

[hst43102]

No, nor do i. Haven't they removed a lot of the newer vehicles in the recent sale of the Tamworth Business (Wasn't that formerly Chase Buses?).

That was the Cannock business, but yes they removed the newer vehicles and filled it with old Solos and DAFs. Same with Yorkshire Tiger.

 

[Bristol LHS]

The First examples (North Devon, Northampton, SMT) take some beating.

Go-Ahead’s purchase of Tyne and Wear Omnibus, only to instantly sell it on to Busways was an odd one (okay, sure there must have been some upside for Go-Ahead, or their directors at least, but basically doing Busways a favour)

Go-Ahead’s East Anglia purchases also quite questionable. They seem to have expanded Hedingham; but Konect and Anglian (especially) are a shadow of their former selves. Go Ahead also didn’t last long in the West Midlands (the Travelcard takes some beating) but through their purchases, they seem to have created a business that Rotala have been able to make a go of.

Go-Ahead’s purchase of OK Travel ridded them of a pesky competitor in Tyne and Wear and north Durham, but they sold up the core operations in Bishop Auckland to Arriva, only to have repeatedly nibbled at the territory competitively since. I understand Peter Huntley arrived too late to stop the sale. What could have been…

Sticking in the bottom half of County Durham, Stagecoach’s adventures in Darlington weren’t an acquisition, but given they ended up with a sub-scale operation and sold it to Arriva, was it worth the financial cost, let alone the reputational impact? West Midlands Travel’s brief ownership of United/Tees/TMS also an odd one to add to their longer-standing Tayside adventure.

 

[Nammer]

Stagecoach purchasing both Portsmouth Citybus and Southdown, then were forced to sell part due to competition concerns - sold to Transit Holdings.

 

[DunsBus]

Go-Ahead’s purchase of Tyne and Wear Omnibus, only to instantly sell it on to Busways was an odd one (okay, sure there must have been some upside for Go-Ahead, or their directors at least, but basically doing Busways a favour)

As I understand it, Busways went after Tyne and Wear Omnibus when it heard that Trimdon was selling up. Trimdon said no to a sale to Busways, so Busways got Go-Ahead to act as an intermediary. I believe that Trimdon were rather less than pleased on hearing that Busways had managed to get Tyne and Wear Omnibus after all.

 

[TheGrandWazoo]

As I understand it, Busways went after Tyne and Wear Omnibus when it heard that Trimdon was selling up. Trimdon said no to a sale to Busways, so Busways got Go-Ahead to act as an intermediary. I believe that Trimdon were rather less than pleased on hearing that Busways had managed to get Tyne and Wear Omnibus after all.

Correct - it was a very smart piece of work by GA and Busways.

 

[DunsBus]

Correct - it was a very smart piece of work by GA and Busways.

It certainly was - though I don't think that sentiment would have been echoed by Trimdon!