Mobico shares crater amid £460m North American school bus sale
Mobico shares cratered more than 18 per cent on Friday as it announced plans to sell its North American school bus business to the US infrastructure investor, I Squared Capital.
The much-anticipated deal is valued at £460m and is expected to create upfront net proceeds of around £275m to £290m while also trimming debts.
Mobico’s chief executive Ignacio Garat said on Friday the transaction represented a “significant milestone” for the firm, which was formerly known as National Express.
Its North American school bus business had weighed heavily on earnings since the pandemic amid staff shortages and wage inflation. The company’s intention to offload it was first announced back in October 2023 and is unaninmously supported by the Board.
But the stock plummeted in early deals on Friday as investors failed to get on board and Mobico also forecast full-year operating profit to fall at the lower end of guidance.
Shares in the FTSE 250 transport operator have performed abysmally over the last few years amid long-running struggles which stem from the pandemic.
A rebrand from National Express in 2023 failed to get things moving and the stock cratered further in March last year after audit issues delayed publication of the company’s annual results.
A leadership switch-up and improving results have since seen shares recover slightly, but they are still down around 20 per cent this year to date.
Garat said: “The transaction follows a comprehensive process and reflects the work that has been carried out with the School Bus management team to improve its performance over the last 18 months as well as the ongoing headwinds.”
US-based I Squared Capital also bought Arriva Group from Deutsche Bahn, Germany’s state-owned railway company, in 2023.
Gautam Bhandari, Global Chief Investment Officer at I Squared, said: “School transportation is more than just a daily commute. It’s a vital link to education, which underpins a functioning society regardless of stage in the economic cycle.
“We are proud to add this essential service to our portfolio and look forward to continuing to support its growth.”
