National Express Group PLC
11 October 2005
11 October 2005
National Express Group
£262 million deal with Spain's leading coach and bus operator, Alsa
Further to our announcement of 6 October, National Express Group ('National
Express' or 'the Group') today announces that it has reached agreement with the
shareholders of Alsa, the leading private operator of coach and bus services in
Spain, to bring together two of Europe's largest bus and coach operators. The
agreement will be effected by the transfer of the Alsa group of companies to
National Express in exchange for consideration of £262 million (€381 million).
The transaction, which is expected to be earnings enhancing for the Group on a
normalised* basis in its first full year, is subject to clearance from the
Servicio de Defensa de la Competencia, the Spanish competition authority, and
should complete in about six weeks.
The consideration will be satisfied by the issue of 13.5 million shares,
representing 9.9% of the Group's existing share capital, to a company under the
control of the Cosmen family, the current owners of Alsa, and the payment of
£149 million (€217 million) in cash, to be funded through a new bank facility.
As part of the transaction, the Group will also assume debt of approximately
£199 million (€289 million).
The key features of the transaction are;
• Alsa brings National Express immediate scale in an attractive growth market;
• Alsa is Spain's leading coach operator with an extensive national and
• Alsa's operations complement the Group's core business, bringing together
two of Europe's largest coach operators;
• Spain is the third largest coach market in Europe and has significant growth
* excluding goodwill impairment, intangible amortisation and exceptional items.
• Alsa is a high quality operator with strong and predictable cash flows with
long term route concessions;
• Over the last three years Alsa's coach business has experienced year on year
revenue growth of more than 6%;
• Alsa's coach fleet has an average age of six years;
• Alsa has a significant number of urban bus operations in Spain;
• The Cosmen family will become one of the Group's principal shareholders and,
on completion, will have Board representation.
Alsa has a fleet of 1,400 vehicles, carries 93 million passengers per annum and
employs 3,100 people. Whilst the vast majority of Alsa's public transport
interests are in Spain, it also has bus operations in Portugal and Morocco, as
well as international long distance coach operations across Western Europe. The
transaction does not include the coach and bus operations in China and South
America which remain under the control of the Cosmen family. Alsa will operate
as a separate division of National Express.
Alsa has a history stretching back over two centuries. On completion, Alsa's
President, Jorge Cosmen, aged 37, will join the National Express Group Board as
a non executive director. The Cosmen family has agreed, subject to certain
limited circumstances, to hold their shares in the Group for a minimum of two
years and have also indicated their intention to increase their stake in the
Group up to an aggregate 15%, subject to market conditions. National Express has
agreed that, as long as the Cosmen family remains interested in at least 8% of
the Group's ordinary shares, it will be entitled to a position on the Board of
National Express and will have a pre-emption right in the unlikely event that
the Group disposes of a material part of Alsa's business.
For the year ended 31 December 2004, Alsa had turnover of £219.0 million (€318.5
million). On a normalised basis, EBITDA for the year ended 31 December 2004 was
£49.5 million (€72.0 million) with EBIT of £30.6 million (€44.5 million). As at
31 December 2004, Alsa had gross assets of £317.2 million (€461.4 million) and
net assets of £103.7 million (€150.8 million). Alsa is currently trading in
line with its expectations and EBITDA growth in the region of 10% is anticipated
for the year ending 31 December 2005.
The Group's current buyback programme will be reviewed post completion.
Commenting on the transaction, Phil White, Chief Executive of the National
Express Group said:
'We are delighted to be taking this significant step forward by expanding our
Group into Spain. Alsa has developed over its impressive 200 year history into
one of Europe's most respected public transport groups. Its extensive growth in
recent years is a tribute to Alsa's reputation for high quality operations and
to the leadership of Pepe Cosmen.
The relationship between the National Express Group and Alsa has developed over
a number of years and is founded on mutual respect and a highly complementary
management philosophy and business culture. We are delighted that the Cosmen
family will play an important part in the future of the Group through their
substantial shareholding. Jorge Cosmen joins our Board as a director and will
provide us with both continuity and unrivalled experience in Europe.
Both the National Express Group and Alsa have great experience in the express
coaches and urban bus markets. We are confident that bringing together our
knowledge and skills in these areas will create a platform to enable the
enlarged Group to achieve greater success and enhanced value for our
Jorge Cosmen, commented; 'This is an historic moment for our family and a
critical move as we continue to build on our long history in the transport
sector. We believe that bringing our two businesses together will create
substantial value to shareholders, employees and customers as we grow together
building on each other's experiences and strengths. I believe that the vision,
values, management style and business approach of National Express are very much
aligned with our own. We now have a great platform to grow our businesses in
the coming years.
Our family feel very proud to become one of the largest shareholders of one of
the most important passenger road and rail transport operators in the world.
For me personally, it is a great pleasure to join the Group's Board of Directors
and I am looking forward to working with the Board in the future.'
Trading across the Group's UK and North American bus and coach operations for
the full year remains in line with expectations.
The terrorist activities in July had an impact on discretionary rail travel over
the summer months, particularly around those franchises which carry passengers
into London. However, this loss of revenue has been partly mitigated by
existing revenue and profit share arrangements with DfT Rail. The run up to
Christmas is important and we are encouraged to see a return to passenger growth
over the last six weeks.
- E ND S -
Notes to Editors
• Euro exchange rate used is £1:€1.455 euros
• There will be an analyst meeting at 0930 hours on Tuesday 11 October
2005 at the City Presentation Centre, 4 Chiswell Street, London, EC1. Details
are available from Sara Freeman at Financial Dynamics on 020 7269 7134.
• A webcast is available from 0930 hours at www.nationalexpressgroup.com
For further information:
Phil White, Adam Walker, Nicola Marsden
National Express Group PLC 020 7529 2000
Andrew Dowler/Ben Foster
Financial Dynamics 020 7831 3113
National Express Group has been advised on this transaction by Merrill Lynch
International and Quantica, a Spanish advisory firm based in Madrid.
The statements that the transaction is expected to be earnings enhancing on a
normalised basis in its first full year do not constitute a profit forecast and
should not be interpreted to mean that earnings for those years or any
subsequent financial period would necessarily be greater than those for any
preceding financial period.
This information is provided by RNS
The company news service from the London Stock Exchange