Takeover deal is a real eyebrow-raiser
Jul 1 2009 By Andrew Hebden, The Journal
FIRST Group chief executive Moir Lockhead is well known in the transport industry for his big, bushy eyebrows.
In fact, they are such a distinguishing feature of the County Durham-born executive’s face that a Google search for his name and the word "eyebrows" yields 238 results.
On Monday Mr Lockhead became responsible for not only owning the most famous eyebrows in the transport industry, but also for raising one or two on the faces of other people when his company launched an audacious takeover bid for National Express.
It was a move that seems to have caught the market by surprise and made for an interesting new chapter in the sorry tale of the East Coast Main Line operator, which has been dogged by headlines surrounding its ongoing financial viability.
FirstGroup’s move was no doubt motivated by the precarious position in which its rival finds itself, saddled as it is with a £1.2bn debt burden and the prospect of dwindling passenger numbers as a result of the recession (a fact also reflected in Arriva’s trading statement yesterday).
Lockhead is a canny operator and will have enjoyed adding to National Express chief executive Richard Bowker’s sleepless nights by going public on its ambitions to take over the ailing company. But I suspect there’s a bit more to this move than mischief making – FirstGroup hasn’t grown from being Aberdeen’s local bus company into the world’s second-largest public transport business without being extremely acquisitive.
The firm has also long shown that it is not afraid of a challenging takeover, having bought out the parent company of the iconic but struggling Greyhound bus company in the United States, a business which it is now turning around with some gusto.
About 12 months ago, I travelled to Aberdeen to interview Lockhead for our Monday Interview feature. It’s hard not to be impressed by the softly-spoken North Easterner who still travels to the region to watch his football team, Hartlepool United.
During our chat I suggested to him that it was strange, given his background, that one of the few places in Britain that First buses are not a familiar sight on the roads is in the North East. I asked whether that was something he would like to change in future and he was fairly non-committal in his response.
At that time, National Express was still in the infancy of its new East Coast franchise and talk of a full-blown recession still seemed somewhat premature.
How things have changed since and the climate may be ripe for the kind of takeover even Lockhead could not have contemplated just a year ago.
No doubt there will be regulatory burdens on the horizon which could jeopardise such a move. But, as the Government proved in the case of the banks, sometimes competition concerns are not the prime consideration in the current climate.
If a First-National Express tie-up provides a get-out-of-jail card for both the troubled East Coast operator and for a Government which can ill afford to see another operator of its most prestigious franchise crumble, it may be that this deal will be waved through.
And it’s not difficult to see how Lockhead can see the potential synergies, given his rail companies already operate regional services in Scotland and across the North via the TransPennine Express franchise.
Lockhead seems to be on to a winner here which would underline his position as one of Britain’s most successful and influential business executives. Not bad for a former bus mechanic from West Cornforth.
Andrew Hebden - The Voice of the nebusiness
