Arriva sells car rental division to Northgate |
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Published
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Tue, 31 Jan 2006 20:35
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LONDON - Arriva PLC, the European bus and train operator has said that it will be selling its car and commercial vehicle rental division to Northgate PLC in a deal worth £129 million. Arriva said that it had agreed to let go of this division so as to concentrate on passenger services across Europe as well as in the UK.
The group said that it would be using the proceeds of this sale to repay debt and look for franchisee opportunities. "The sale of Arriva Vehicle Rental is at the right price and the right time. It enables us to focus even more strongly on developing our passenger services businesses," said Arriva chief executive Bob Davies.
"Our strategic goal remains recognition as the number one transport services provider in Europe, where we see substantial scope for profitable investment." The group also said that the sale price was "a surplus over net assets" of £23 million. The rental has around 33 branches in England and boasts of a fleet of 11,000 vehicles. Last year, the business had made an operating profit of £12.6 million.
Northgate said that it was putting 6,050,000 new shares to fund the takeover, "This acquisition will enable Northgate to improve customer service through wider UK coverage and at the same time derive benefits from the economies of scale generated by the enlarged business," said Martin Ballinger, chairman of Northgate. Shares in the company rise 38 to £10.88 in early trading, while Arriva shares also increased by 29 pence to 597½ pence.
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