Mobico shares plunge after £457m sale of US school bus business
Mobico Group’s share price dropped by 30% on Friday, after announcing the disposal of its US School Bus business for £457m.
The Birmingham-headquartered transport giant, previously known as National Express, has offloaded School Bus to global infrastructure investment manager I Squared Capital, which also owns Arriva Group.
In an announcement to the London Stock Exchange this morning, Mobico also said it expected to deliver a “significant statutory loss” due to “goodwill write-offs, derecognition of deferred tax assets and further Onerous Contract Provisions relating to its German business”.
Investors reacted negatively to the proposed deal and loss news, with shares dropping to 38.87p by midday.
Mobico expects net proceeds of £275m – £290m and net debt to be reduced following the disposal of School Bus’s IFRS 16 leases of $38m.
Terms include an earn-out of up to $70m, which is dependent on the future performance of the business.
The transaction is conditional upon certain customary conditions, including antitrust approvals, and is expected to be completed early in the third quarter of 2025.
BofA Securities and Goldman Sachs are acting as joint lead financial advisers for Mobico Group. HSBC is also a financial adviser to the listed company. Slaughter and May is acting as the UK legal adviser and Foley & Lardner LLP is acting as the US legal adviser to Mobico.
Ignacio Garat, Group Chief Executive of Mobico, commented: “This agreement is a significant milestone for Mobico. It is a first step in strengthening the Group’s balance sheet and will allow us to reallocate resources away from a capital-intensive business as we focus on continued deleveraging alongside funding our pipeline of growth opportunities, especially in ALSA.
“The Transaction follows a comprehensive process and reflects the work that has been carried out with the School Bus management team to improve its performance over the last 18 months as well as the ongoing headwinds. In I Squared, we have found an owner with considerable experience in the sector that will invest in the future of the business. We are continuing to review options to further accelerate the Group’s debt reduction and deleveraging.”
Tim Wertner, Chief Executive of School Bus, commented: “Since I joined the business in June 2023, our focus has been on recovering lost routes, securing new contracts, recruiting and retaining drivers and delivering price rises above inflation. I am pleased that our success has attracted a buyer of I Squared’s quality and we look forward to partnering with I Squared to deliver the growth opportunities ahead. I am confident that with our new owners we will be ideally placed to continue delivering for our people and for the communities we serve. I would like to thank everyone at School Bus for their hard work and commitment in creating the business we have today.”
Gautam Bhandari, Global Chief Investment Officer and Managing Partner at I Squared, commented: “School transportation is more than just a daily commute. It’s a vital link to education, which underpins a functioning society regardless of stage in the economic cycle. We are proud to add this essential service to our portfolio and look forward to continuing to support its growth.”
