Arriva buyout agreed and puts share prices up

Following months of speculation, transport group Arriva (LON:ARI) has accepted a takeover offer of £1.59bn from German firm Deutsche Bahn.

Rob Hull - Thursday, April 22, 2010

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Arriva has accepted a takeover offer from Deutsche Bahn

The deal was rumoured to be going ahead late in the day yesterday creating a share price spike of 0.60 per cent before the market closed.

And share prices opened this morning at 770p, another climb of 0.65 per cent, following confirmation from the firm that runs the German national rail services.

Deutsche Bahn has confirmed it will pay 775p per share to take control of the third largest bus company in Britain which operates across 12 European countries and employs over 44,000 people.

The buyout offer comes as no surprise with Arriva releasing a statement on Monday claimed it was ‘in advanced discussions with Deutsche Bahn about the terms of a possible recommended cash offer’.

Arriva shareholders will still be entitled to receiving a final dividend of 18.8p per share in respect of the financial year ending 31 December 2009.

The deal has been eyed by Deutsche Bahn for months with the German firm hoping to develop one of Europe’s largest bus and rail groups, adding to their national rail service in Germany and Chiltern Railways and rail freight services in the UK.

Dr Rüdiger Grube, CEO of Deutsche Bahn, said: “Arriva’s activities will strengthen Deutsche Bahn’s strategic positioning in Europe, principally through Arriva’s successful targeting of Europe’s increasingly liberalised and fast growing transport markets which are of strategic interest to Deutsche Bahn”.

Shareholders will now be asked to give their approval to conclude the deal.

French group SNCF had previously been in talks with Arriva over a potential buyout, however discussions broke down leaving the door open for SNCF’s biggest rival, Deutsche Bahn, to move in.

A counter bid isn’t expected from the French firm, but it could tempt them to move for one of Arriva’s UK-based rivals.

National Express (LON:NEX), Stagecoach Group (LON:SGC), FirstGroup (LON:FGP) and Go-Ahead (LON:GOG) share prices are all in positive territory today as a result.


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