Stagecoach Bus Holdings Limited has entered into binding agreements to acquire Kelsian Group’s east London bus operations and depot at Lea Interchange for total consideration of £20 million.

The company says upon completion, £10m will be payable, with a further £1m per annum payable for ten years commencing on the first anniversary following completion, subject to certain conditions.

Stagecoach explains this acquisition “is a good strategic fit” with its existing operations in east and south-east London. Lea Interchange depot is well located close to Stratford, the busiest station in the UK. It operates eleven contracts on behalf of TfL using a fleet of around 150 buses, with an annual turnover of around £38m.

The acquired contracts have an acceptable expiry profile and there are opportunities to improve operational performance and grow contract margins as routes are retendered.

Additionally, the acquired depot provides a positive platform to bid for new contracts in the area over the short and medium term. In addition to the initial £10m consideration, we would anticipate the incremental impact on Stagecoach’s net debt upon completion to increase by around a further £20m, reflecting the IFRS 16 liabilities associated with the vehicle and property leases.

Martin Griffiths, Stagecoach Chief Executive, said: “We have an extensive track-record of operating high-quality and profitable bus services on behalf of Transport for London.

“This targeted acquisition provides operational and margin improvement opportunities that we have successfully delivered at our other London bus depots.

“We look forward to working with TfL to deliver even better bus links to local communities in east London and also helping support the Mayor’s drive to deliver a net zero transport system.”

(Picture – Kelsian Group)