LONDON: Mobico Group PLC announced Monday it has reached an agreement in principle to sell the net assets and operations of its West Midlands bus business to the West Midlands Combined Authority for expected upfront residual proceeds of approximately £24 million.
The transaction, which is expected to close around November 2026, aligns with the company’s strategy to monetize its U.K. Bus assets and reduce exposure to the uncertainty of impending franchising in the region.
The headline asset value of the business is approximately £102 million, comprising primarily depots and a diesel fleet, broadly in line with book value, along with £6.5 million in cash retained for operating purposes. Deductions totaling roughly £78 million include the transfer of pension liabilities, electric vehicle contracts based on current market pricing, and additional recruitment and fuel hedging costs.
Mobico will also receive deferred consideration of £5.5 million, with half payable at the end of 2027 and the remainder upon vacant possession of the Birmingham Central depot, expected at the end of 2029.
The company is required to complete an internal reorganization prior to closing, transferring the assets and operations into a new legal entity.
“This agreement is another significant milestone in making Mobico simpler and stronger while substantially de-risking the Group,” said Phil White, executive chair of Mobico. “As the West Midlands moves toward a franchised network, WMCA is the logical buyer to facilitate that transition. The transaction represents fair value for the assets and liabilities of U.K. Bus while providing certainty for our colleagues upon completion.”
The West Midlands approved the move from deregulated bus services to a franchising model in May 2025, with full rollout expected by the end of 2029. Mobico has operated the majority of urban bus services in and around the region for approximately 40 years, currently running about 1,400 buses and 120 million passenger journeys annually.
For the 15 months ending March 31, 2026, the U.K. Bus business generated revenue of £338 million, adjusted EBITDA of £23 million and adjusted operating profit of £2 million. Excluding gains from the sale of two depots to WMCA in late 2025, the business was marginally loss-making.
The transaction is expected to be broadly neutral to earnings and to 2026 covenant gearing. The Group retains a net liability for historical insurance claims of approximately £5 million as of March 31, 2026.
The agreement includes a customary completion accounts mechanism and a further contingent consideration of £9.9 million payable to Mobico if WMCA reverses or ceases actively progressing the move to franchising before May 2028.
