FirstGroup has signed an agreement to purchase Ensign Bus Company.
Essex-based Ensignbus’ commercial bus operations comprise two business-to-business segments that include rail replacement and private hire contract operations and a local bus route network complementary to First Bus’s operations in the region.
The business has a young vehicle fleet of 55 buses that will require limited capital expenditure for several years. The Ensignbus specialist heritage fleet is excluded from the transaction.
In addition to its commercial operations, Ensignbus has a vehicle refurbishment and resale business that purchases used vehicles and refurbishes to modern standards before re-selling. This should let First Bus take the oldest, most polluting diesel buses out of service.
The group anticipates that the market for the resale of lower emission used diesel vehicles will continue to remain robust in the medium term, followed by the emergence of a similar market for the resale of zero emission vehicles.
If the acquisition completes before financial year end, First anticipates a year end adjusted net cash position of £70 to £80m, reflecting the ongoing buyback programme and the timing of net capital expenditure and working capital flows.
FirstGroup chief executive Graham Sutherland said: “The acquisition of Ensignbus, a long-established, high-performing business, will allow us not only to grow our B2B offering but to also enhance our operational footprint in Essex.
“This is a strategically and financially accretive growth opportunity for us, and one that is fully aligned to our balanced capital allocation policy.”
Ensignbus chair Peter Newman added: “We’re pleased that First Bus, with their reputation for customer service, innovation and sustainability, will take the Ensignbus business forward as a going concern and we wish them a successful future.
“We will continue to serve our communities and operate our network as usual until the completion date.”
First Bus is the second largest regional bus operator in the UK, serving two-thirds of the UK’s 15 largest conurbations with a fleet of around 4,900 buses.
It is committed to operating a zero-emission bus fleet by 2035 and to not purchase any new diesel buses after 2022.
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