Mobico says West Midlands bus sale clears franchising uncertainty risk

Mobico Group PLC on Tuesday said it expects to receive upfront proceeds of £24 million from the sale of its West Midlands bus business to the West Midlands Combined Authority.

The Birmingham, England-based transportation company which owns National Express said the deal is in line with its strategy to monetise UK bus assets, and "substantially de-risks" the firm from uncertainty of franchising in the area over the coming years.

The headline value of the assets being sold is around £102 million, Mobico said, comprising primarily of the bus depots and diesel fleet, and £6.5 million of cash retained for operating purposes.

After deductions of £78 million for the transfer of bus liabilities, including the bus pension and the transfer of the electric vehicle contracts as well as additional recruitment and fuel hedging costs, Mobico expects to receive upfront proceeds of £24 million.

Further deferred consideration of £5.5 million is due, with half payable at the end of 2027, and half payable on vacant possession of the Birmingham Central depot expected at the end of 2029.

Mobico said the deal is expected to be broadly neutral to earnings going forward and to 2026 covenant gearing.

For the 15 months to March 31 2026, the business being sold generated revenue of £338 million, adjusted earnings before interest, tax, depreciation and amortisation of £23 million and adjusted operating profit of £2 million.

"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," Executive Chair Phil White said.

The deal is expected to close around November.

Shares in Mobico were up 0.8% at 26.60 pence in London on Tuesday morning, shortly after the deal was announced.

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