PE group ‘in pole position’ should transport giant Arriva be sold

Northern Rail

Northern, the poorly-performing rail franchise, could soon be under new ownership, according to reports this afternoon (November 1).

Sky News claims private equity group Carlyle is in exclusive talks to buy transport giant Arriva Group, which runs the Northern franchise and extensive bus services throughout the North West.

The deal is potentially worth £2.16bn should Arriva parent, Deutsche Bahn, opt to sell the transport business which was founded in a motorcycle shop in Sunderland by the Cowie family in 1938, and now operates transport services throughout the UK, and 14 European countries, employing 53,000 staff.

Sky claims Carlyle is in pole position should state-owned transport operator Deutsche Bahn proceed with a sale, which would be likely to happen early next year, but could be dependent on the outcome of Brexit.

Rival bidders include Apollo Global Management and several multinational transport companies.

Deutsche Bahn took control of Arriva in 2010 after a successful £1.6bn takeover deal.

Arriva’s Northern rail franchise has been mired in controversy since last May when a botched timetable upgrade led to thousands of services across the North West being delayed or cancelled.

The Metro Mayors for Liverpool City Region and Greater Manchester, Steve Rotheram and Andy Burnham, respectively, have both called on the Government to strip Northern of its franchise due to its continued poor performance.

Transport Secretary Grant Shapps recently asked his officials to draw up contingency plans for nationalising the franchise, which operates 2,800 services every day.

In the bus sector, Arriva has an 18% share of the London market and a 15% share in the regions.

Sky News said Arriva and Carlyle declined to comment, while Deutsche Bahn said it had always indicated its intention to pursue a dual-track disposal process.

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