Rotala has announced the acquisition of FirstGroup’s bus operations in Worcestershire.
Announcing the disposal in an interim management this morning, First said: “We continue to work through our programme of disposals. In November 2012 we agreed the sale of our Birkenhead and Chester operations for £4.5m and today we are pleased to announce the sale of our Kidderminster and Redditch bus businesses to Rotala PLC for a gross consideration of £1.5m.
“While there remains considerable work to be done across our UK Bus division, we are encouraged by early positive signs in some of our markets.
“As previously stated, we expect UK Bus operating margin to be approximately 8% for the full year.”
AIM-listed Rotala will acquire two freehold depots, one in Kidderminster and the other in Redditch, 36 vehicles, and various items of plant and equipment, and will continue to run the services that First currently operate from these locations.
The Kidderminster depot comprises a site of some two acres and was purpose built in 2001. It can accommodate up to 60 vehicles. The Redditch depot, built about 35 years ago, has a slightly smaller useable area and can accommodate about 50 vehicles. In the year ended 30 June 2012, these depots reported combined revenues of approximately £5.2 million and an operating loss of £0.27 million. They employ about 120 staff.
Rotala says that the acquisition will enable it to expand and consolidate its position in those areas of Worcestershire which are contiguous to its main areas of operation in the Birmingham conurbation. By integrating these acquired depots into its current depot network, the AIM-listed group says that it will be able to take advantage of operating efficiencies generated by the acquisition.
The purchase is not expected to have a material impact on earnings in the current financial year. Once the integration of operations and overheads has been fully implemented, the acquisition is expected to have a beneficial effect on earnings in the following years. On the basis of the information available at present the purchase of the operations is expected to generate a small amount of negative goodwill.