Arriva shares up 16.8% after new takeover bid

Published on Wednesday 17 March 2010 20:03

ARRIVA shares jumped by almost a fifth yesterday, after the transport group confirmed its second takeover bid in as many months.

Responding to market speculation, the firm issued a brief statement confirming it had received an "unsolicited" takeover approach. "There can be no certainty that any offer will be forthcoming," the Sunderland-based company warned.

Arriva refused to comment on the identity of the latest bidder, although it is believed to be German group Deutsche Bahn. There was speculation in the market yesterday that it was preparing a bid of 700p per share.

Analysts were divided on the speculation. RBS said it had doubts over the German company's ability to fund the deal. "We're unsure whether that group has the balance sheet strength to absorb Arriva's 2.1 billion enterprise value," RBS said.

Shore Capital, meanwhile, said the attraction of Arriva for Deutsche Bahn was probably the chance to extend its footprint in continental Europe outside Germany, with most of its current operations in its home market. That could throw open the possibility of disposals of Arriva's UK assets, in what is considered to be one of Europe's most competitive markets.

Arriva, which traces its origins back to the 1930s, is one of Europe's largest transport providers. It has about 37,000 staff, and operations in 12 countries across Europe. In the UK, its businesses include the CrossCountry rail franchise; it is also one of the largest bus operators in London.

The company grew out of Cowie, a family-owned second-hand motorcycle shop that began selling cars before entering public transport in 1980 through the acquisition of the London-based Grey-Green bus company. It then grew through a series of acquisitions as the UK bus market was liberalised.

Only seven weeks ago, the FTSE-250 company confirmed it was in talks with SNCF, and the French company was expected to merge Arriva with its Keolis subsidiary. However, talks between the two companies broke down earlier this month. Keolis is the largest private sector transport company in France, while in the UK it operates a string of rail franchises through joint ventures with Go-Ahead and FirstGroup.

Shares in Arriva jumped 18 per cent to more than 680p when the company issued its statement, and they closed up 97.5p, or 16.8 per cent, at 677p last night.

Its shares have climbed more than 50 per cent since the French bid emerged.

The latest takeover talk drove up the entire transport sector.

Aberdeen-based FirstGroup rose as much as 7 per cent on the news before closing up 3 per cent, while Perth-based Stagecoach was up 3.3 per cent. National Express, itself a takeover target until it completed a major refinancing last year, increased 3 per cent.