Stagecoach announced on 27 May that it has entered into an agreement to acquire Kelsian Group’s Tower Transit East London bus operations and depot at Lea Interchange for a total of £20m. The first £10m will be payable on completion of the sale, with a further £1m per annum payable for 10 years commencing on the first anniversary of completion, subject to certain conditions.
The operator said the acquisition is a good strategic fit with its existing operations in east and south-east London.
Lea Interchange depot is located close to Stratford, one of the busiest stations in the UK. It operates eleven contracts on behalf of TfL using a fleet of around 150 buses, with an annual turnover of around £38m. Stagecoach believes that there are opportunities to improve operational performance and grow contract margins as routes are retendered.
The acquired depot also provides a platform for Stagecoach to bid for new contracts in the area over the short and medium term. In addition to the initial £10m consideration, Stagecoach anticipates the incremental impact on its net debt upon completion to increase by around a further £20m, reflecting the liabilities associated with the vehicle and property leases.
Martin Griffiths, Stagecoach Chief Executive, said: “We have an extensive track-record of operating high-quality and profitable bus services on behalf of Transport for London. This targeted acquisition provides operational and margin improvement opportunities that we have successfully delivered at our other London bus depots. We look forward to working with TfL to deliver even better bus links to local communities in east London and also helping support the Mayor’s drive to deliver a net zero transport system.”
Kelsian Group was formerly known as SeaLink Travel Group, with its London operations trading as Tower Transit. RATP Dev London Transit operations, the joint venture between RATP Dev UK and Tower Transit in West London, continue unchanged.
