Metro operator in Arriva takeover link
Mar 18 2010 By Karen Dent, The Journal
THE German company due to start operating the Metro next month is being linked with a possible multi-million pound takeover bid for Sunderland public transport giant Arriva.
The Wearside firm, which runs buses in Britain and across Europe and also has two UK rail franchises, yesterday confirmed it had received an "unsolicited approach from a third party". Under stock market rules, Arriva cannot name any potential bidders.
It comes as speculation mounted that German public transport group Deutsche Bahn – which will operate Metro trains and stations on behalf of Nexus from April 1 – is eyeing up Arriva.
Arriva, which runs bus services in 11 European countries as well as the UK plus the CrossCountry and Arriva Trains Wales rail franchises, had been holding merger talks with French state-owned public transport group Keolis.
But industry experts say the end of those negotiations without agreement leaves Arriva in a vulnerable position.
Public transport consultant John Austin, from Austin Analytics, said: "They are a target of interest to aggressive European companies. Arriva has significant expansion plans across Europe and it is now more of a European operator than it is a British one.
"It is the only British operator to make extensive inroads into Europe. Because of its UK base and because it understands how the whole of Europe’s public transport work, it is of great interest to companies that want to expand."
As well as Keolis – which owns French rail operator SNCF and is the minor shareholder in Newcastle-based Go-Ahead’s three UK rail franchises – and Deutsche Bahn, Singapore-based ComfortDelGro has also been mentioned as a potential bidder.
Mr Austin added: "The French are particularly interested because their own domestic markets are becoming more open and perhaps it is a way of protecting itself against competition for contracts.
"Deutsche Bann are very large and they are very aggressive. They have yet to enter the UK bus market. They’ve already bought into rail operations in the UK."
The German firm has also reportedly been talking to Eurotunnel about running high-speed trains through the Channel Tunnel to link London and Frankfurt.
But Mr Austin said ComfortDelGro, which owns London’s Metroline buses and runs coaches in Scotland in partnership with Stagecoach, should not be ruled out.
"ComfortDelGro have been very quiet but I do think they are on the look-out and now might be the right time to expand," he said.
However, such a tie-up could cause issues for regulators as both Arriva and ComfortDelGro have significant interests in the London bus market.
Shares in Arriva rose by 14% after the group confirmed the takeover approach.
