Mobico has agreed a deal to sell its remaining UK regional bus operation to the West Midlands Combined Authority (WMCA) for £24 million upfront. The group, which also operates the National Express coach network, said the sale of its West Midlands-based UK Bus business forms part of a broader strategy to make Mobico "simpler and stronger."
Deal details and valuation
The WMCA will pay £24 million upfront for the business, with a deferred payment of £5.5 million also included. Half of the deferred amount is due at the end of 2027, with the remainder expected at the close of 2029. Mobico said the UK Bus business carries a total valuation of approximately £102 million, largely driven by its depot network across the region and its fleet of diesel vehicles.
However, the total cash value of the transaction was reduced by roughly £78 million owing to the transfer of liabilities, including the UK Bus pension scheme and electric vehicle contracts. The London-listed company announced it will undertake an "internal reorganisation" of UK Bus ahead of the completion of the sale, which is anticipated to conclude in November.
Franchising shift and rationale
The proposed disposal of UK Bus, which operates around 1,400 services across the West Midlands, follows the local authority's approval last year of plans to transition from deregulated bus services to a local franchising model by the end of 2029. Mobico pointed to the "uncertainty" surrounding this shift, alongside a recent surge in operating costs, as part of its rationale for proceeding with the deal.
Phil White, executive chairman of Mobico, said: "This agreement is another significant milestone in making Mobico simpler and stronger while substantially de-risking the group. UK Bus has been break-even for a number of years and the uncertainty of future franchising in the area presented a significant headwind for the group in managing the cost base and liabilities of the business going forward."
Recent disposals and market reaction
The sale follows Mobico's completion of the disposal of its US school bus operation last year, in a deal valued at up to 608 million US dollars (£457 million). Mobico shares were 0.4% higher at 26.5p in early trading.
