ComfortDelGro Corporation is buying a portion of FirstGroup's London bus business and assets for £57.5 million (S$109 million) as it seeks to expand its operations in London.
The purchase will allow ComfortDelGro - which already operates some 1,200 buses in London through its wholly owned subsidiary Metroline - to boost its fleet size in London to about 1,700. Prior to the acquisition, Metroline had a 12 per cent share of the market, based on mileages operated.
The acquisition, which will take place through Metroline, will be funded through a mix of internal funds and bank borrowings.
The business that is being purchased comprises five garages across West London - namely Alperton, Greenford, Hayes, Uxbridge and Willesden Junction - and operates a fleet of 494 buses while employing about 1,700 people.
It has an annual turnover of about £111 million, with an Ebitda (earnings before interest, tax, depreciation and amortisation) margin of nearly 10 per cent.
"We are naturally excited about the expansion of our business in London through this acquisition and will continue to work hard at providing a high quality of service to our customers," said ComfortDelGro's group chief executive officer Kua Hong Pak.
The acquisition is slated for completion by the middle of this year, subject to regulatory approvals. After the transaction is completed, the new buses will run under the Metroline brand.
ComfortDelGro said that the acquisition is not expected to have any material impact on the net tangible assets per share and the earnings per share of the group for the current financial year.
One of the world's largest land transport companies, ComfortDelGro has a total fleet size of about 45,800 buses, taxis and rental vehicles.
Aside from Singapore, it also operates in Australia, China, the United Kingdom, Ireland, Vietnam and Malaysia. Overseas operations account for some 40 per cent of group revenue.
Shares in ComfortDelGro closed at $1.90 yesterday, down 1.5 cents.
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