11th Oct 2005 07:01
National Express Group PLC11 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 ("NationalExpress" or "the Group") today announces that it has reached agreement with theshareholders of Alsa, the leading private operator of coach and bus services inSpain, to bring together two of Europe's largest bus and coach operators. Theagreement will be effected by the transfer of the Alsa group of companies toNational Express in exchange for consideration of £262 million (€381 million).The transaction, which is expected to be earnings enhancing for the Group on anormalised* basis in its first full year, is subject to clearance from theServicio de Defensa de la Competencia, the Spanish competition authority, andshould 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 thecontrol 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 regional network; • 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 opportunities; * 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 andemploys 3,100 people. Whilst the vast majority of Alsa's public transportinterests are in Spain, it also has bus operations in Portugal and Morocco, aswell as international long distance coach operations across Western Europe. Thetransaction does not include the coach and bus operations in China and SouthAmerica which remain under the control of the Cosmen family. Alsa will operateas a separate division of National Express. Alsa has a history stretching back over two centuries. On completion, Alsa'sPresident, Jorge Cosmen, aged 37, will join the National Express Group Board asa non executive director. The Cosmen family has agreed, subject to certainlimited circumstances, to hold their shares in the Group for a minimum of twoyears and have also indicated their intention to increase their stake in theGroup up to an aggregate 15%, subject to market conditions. National Express hasagreed that, as long as the Cosmen family remains interested in at least 8% ofthe Group's ordinary shares, it will be entitled to a position on the Board ofNational Express and will have a pre-emption right in the unlikely event thatthe Group disposes of a material part of Alsa's business. For the year ended 31 December 2004, Alsa had turnover of £219.0 million (€318.5million). 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 at31 December 2004, Alsa had gross assets of £317.2 million (€461.4 million) andnet assets of £103.7 million (€150.8 million). Alsa is currently trading inline with its expectations and EBITDA growth in the region of 10% is anticipatedfor 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 NationalExpress Group said: "We are delighted to be taking this significant step forward by expanding ourGroup into Spain. Alsa has developed over its impressive 200 year history intoone of Europe's most respected public transport groups. Its extensive growth inrecent years is a tribute to Alsa's reputation for high quality operations andto the leadership of Pepe Cosmen. The relationship between the National Express Group and Alsa has developed overa number of years and is founded on mutual respect and a highly complementarymanagement philosophy and business culture. We are delighted that the Cosmenfamily will play an important part in the future of the Group through theirsubstantial shareholding. Jorge Cosmen joins our Board as a director and willprovide us with both continuity and unrivalled experience in Europe. Both the National Express Group and Alsa have great experience in the expresscoaches and urban bus markets. We are confident that bringing together ourknowledge and skills in these areas will create a platform to enable theenlarged Group to achieve greater success and enhanced value for ourshareholders." Jorge Cosmen, commented; "This is an historic moment for our family and acritical move as we continue to build on our long history in the transportsector. We believe that bringing our two businesses together will createsubstantial value to shareholders, employees and customers as we grow togetherbuilding on each other's experiences and strengths. I believe that the vision,values, management style and business approach of National Express are very muchaligned with our own. We now have a great platform to grow our businesses inthe coming years. Our family feel very proud to become one of the largest shareholders of one ofthe 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 Directorsand I am looking forward to working with the Board in the future." Trading Update Trading across the Group's UK and North American bus and coach operations forthe full year remains in line with expectations. The terrorist activities in July had an impact on discretionary rail travel overthe summer months, particularly around those franchises which carry passengersinto London. However, this loss of revenue has been partly mitigated byexisting revenue and profit share arrangements with DfT Rail. The run up toChristmas is important and we are encouraged to see a return to passenger growthover 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 LynchInternational and Quantica, a Spanish advisory firm based in Madrid. The statements that the transaction is expected to be earnings enhancing on anormalised basis in its first full year do not constitute a profit forecast andshould not be interpreted to mean that earnings for those years or anysubsequent financial period would necessarily be greater than those for anypreceding financial period. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
NEX.L