Deutsche Bahn sells London red bus operator Arriva to I Squared
Deutsche Bahn has agreed to sell its European transport business Arriva, which operates London’s red buses, to the US-based infrastructure investor I Squared Capital.
The transaction is expected to be completed in 2024, subject to the approval of the board and the Berlin government, the German national railway said today. No financial details were disclosed.
It follows mounting speculation that a deal was close, following reports in the Financial Times that a sale valuing the company at about €1.6bn (£1.39bn) would be made within days.
Alongside the capital’s double-decker buses, Arriva operates the overground network and Chiltern Railways, which runs services between London and Birmingham.
The group employs about 35,000 people across 10 European countries, from Slovenia to Spain.
I Squared, a Miami-based infrastructure investor, made a £1.23bn bid for the London-listed transport giant Firstgroup last year, which was subsequently rejected as “significantly” undervaluing the group’s operations and prospects.
Deutsche Bahn has been looking to sell parts of the business for years in order to trim its substantial debt pile.
Dr Levin Holle, chief financial officer of Deutsche Bahn, said: “Arriva has good prospects for sustainable growth as market liberalisation in Europe progresses.
“The strategic goal of Deutsche Bahn is to make record level investments in environmentally friendly rail in our core business, combined with the massive increase of investment of the German federal government into our German rail infrastructure.”
Mike Cooper, Arriva Group chief executive, said: “This is a great opportunity for Arriva and the start of an important new chapter for our business. I know that the team at I Squared share our belief in providing sustainable transport services that cater for the needs of tomorrow, as well as the pressures of today.”
“The Arriva brand and values will not only be unchanged by the transaction, but they will also be given a new lease of life.”
Today’s deal comes amid a slew of agreements taking some of the UK’s biggest bus and rail operators private.
Stagecoach also backed a £595m takeover by the German investment firm DWS last March, a deal which thwarted proposals from National Express for its own £1.9bn tie-up with the bus operator.