Mobico has struck a deal to sell its remaining UK regional bus operator to the West Midlands local authority.
The group, which also runs the National Express coach business, said the deal to sell its West Midlands-based UK Bus business is part of efforts to make Mobico “simpler and stronger”.
The West Midlands Combined Authority (WMCA) will pay £24 million up front for the business.
The deal also included a deferred payment of £5.5 million, with half payable at the end of 2027 and the other half expected at the end of 2029.
Mobico said the UK Bus business is valued at around £102 million in total, primarily through its depots in the region and fleet of diesel vehicles.
However, it said the total cash value of the deal was reduced by around £78 million due to the transfer of liabilities, such as the UK Bus pension programme and electronic vehicle contracts.
The London-listed firm said it will launch an “internal reorganisation” of UK Bus prior to the completion of the sale, which is predicted to close in November.
The proposed sale of UK Bus, which runs around 1,400 business across the West Midlands, comes after the local authority last year approved plans to shift from deregulated bus services to a local franchising model by the end of 2029.
Mobico highlighted the “uncertainty” related to this and a recent jump in operating costs as part of its justification for the deal.
Phil White, executive chairman of Mobico, said: “This agreement is another significant milestone in making Mobico simpler and stronger while substantially de-risking the group.
“UK Bus has been break-even for a number of years and the uncertainty of future franchising in the area presented a significant headwind for the group in managing the cost base and liabilities of the business going forward.”
The disposal comes after Mobico completed the sale of its US school bus business last year, in a deal worth up to 608 million US dollars (£457 million).
Mobico shares were 0.4% higher at 26.5p in early trading.
