Pan-European Infrastructure offers to buy UK bus operator, Stagecoach for £594.9mn

Pan-European Infrastructure offers to buy UK bus operator, Stagecoach for £594.9mn

LONDON, UK: Inframobility UK Bidco Limited has reached an agreement to acquire the entire issued and to be issued ordinary share capital of UK bus operator, Stagecoach Group Plc for 105 pence in cash for each share valuing Stagecoach’s existing issued and to be issued ordinary share capital at approximately £594.9 million on a fully diluted basis.

Inframobility UK Bidco Limited is indirectly wholly owned by Pan-European Infrastructure III, SCSp (PEIF III), an infrastructure fund managed and advised by DWS Infrastructure.

Consequently, the Stagecoach Directors have today confirmed that they no longer intend to recommend the National Express Offer announced on 14 December 2021.

The cash consideration payable by PEIF III Bidco to holders of Stagecoach Shares under the terms of the Offer will be financed by equity capital committed by PEIF III.

DWS Infrastructure is a patient long-term infrastructure investor with a proven track record and extensive expertise in unlocking the value of its portfolio companies using its experience, network and ability to deploy further capital in return enhancing investments.

Transportation and essential infrastructure represent a core sector of focus for DWS Infrastructure, with multiple investments in the UK such as Corelink, Kelda (the owner of Yorkshire Water) and Peel Ports where DWS Infrastructure has actively supported capital expenditure investments of >£1 billion during its ownership.

DWS Infrastructure has also invested in other leading European transportation platforms, including Hansea, a leading Belgian public bus operator, where DWS Infrastructure is supporting the acceleration of its growth strategy and has engaged with the relevant passenger transport authorities (“PTAs”) to agree a roadmap for the replacement of the company’s bus fleet with low or zero emission vehicles.

As a leading transportation services provider in the UK, with a significant market share and a track record of strong financial performance and predictable long-term cash flows, the Stagecoach business fits with DWS Infrastructure’s investment criteria.

DWS Infrastructure has a strong conviction about the UK bus market opportunity on the back of the introduction of Enhanced Partnerships and potential Franchising arrangements expected to drive increases in bus patronage and improvements in the quality of the service of the network.

DWS Infrastructure intends to focus on long-term sustainable value creation through continued capital investment in Stagecoach’s asset base, supporting the management team in delivering the business plan.

The UK bus sector is at an inflection point as the country looks to (i) decarbonise and transition to low or zero emission vehicles as part of ambitious UK Government plans to reach net zero in the transport sector over the next decade; and (ii) maximise the opportunities from the National Bus Strategy to deliver on the joint improvement plans of local transport authorities and operators to attract people away from private cars towards more sustainable bus travel.

The transition to a low carbon footprint sector and the announced improvement of services will require substantial capital investments in the medium to long-term in order to meet the expectations of passengers and the UK Government. As a leading UK bus operator, Stagecoach will play a key role in driving such transition.

Public transport is critical to government successfully achieving its ambitions around economic recovery, levelling up, better health outcomes for citizens and delivering decarbonisation. Stagecoach is already in a strong position to play a central role in meeting these objectives and this will be enhanced by the opportunities provided by the Offer.

DWS Infrastructure’s experience in the transportation sector combined with its long-term investment horizon makes it well-placed to support the Stagecoach business and provide benefits for all stakeholders.

Commenting on the Offer, Hamish Mackenzie, Head of Infrastructure at DWS said: “Stagecoach is a fantastic business with an exciting future as a central player in a revitalised UK bus and coach market. As a long-term investor in essential services with a strong track record in the UK and European transport sectors, DWS Infrastructure will back Stagecoach to rapidly capitalise on the growth opportunities presented by increased public and private investment in UK bus and coach.

We are focused on supporting Stagecoach and its management team to deliver their strategy for the benefit of passengers, local communities and employees, as well as helping achieve ambitious plans for reaching Net Zero. We are pleased the Board of Stagecoach has unanimously recommended our offer and we look forward to working with the existing management team to grow the business sustainably for the long-term.”

Commenting on the Offer, Martin Griffiths, Chief Executive of Stagecoach said: “Stagecoach is a leading multi-modal public transport operator and the proposed offer presents a major opportunity to maximise the significant growth potential ahead as governments seek to deliver economic recovery, level up communities, provide better health outcomes for citizens, and transition to a net zero future.

We believe it will open a new and exciting chapter for Stagecoach, backed by a team who share our vision for a more sustainable future. We also believe it will deliver positive outcomes both now and in the long-term for all of our key stakeholders: the customers and the communities we serve, the people who deliver our high-quality transport services, our partners in national and local government, and the investors who have supported our continued success over many decades.”

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