Mobico sells West Midlands bus business for £29.5m
The West Midlands Combined Authority has agreed a deal in principle to acquire the region’s largest private-sector bus service.
A settlement for the transfer of National Express West Midlands’ 1,300-strong fleet will be tied up by November, according to the combined authority.
The move will cost £24m, with £5.5m to follow over the next three years, and will be funded through its existing planned investment in the transport network, alongside £11.5m in government funding.
Mobico Group, formerly National Express, plans to quit the region in response to changes to how the region’s bus network operates.
Over the next three years, the combined authority plans to move away from the current private-sector driven model to a “franchised” system, where bus companies operate on routes set by WMCA.
In an announcement, the operator said the decision and planned three year roll-out to 2029 had created “significant uncertainty” for its West Midlands business, which it refers to as “UK Bus”.
“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,” said executive chair, Phil White.
“As the West Midlands moves toward a franchised network, WMCA is the logical buyer to facilitate that transition. The transaction represents fair value for the assets and liabilities of UK Bus while providing certainty for our colleagues upon completion.”
Mobico’s regional operation includes around 4,800 staff, and nine depots.
The firm operates services in Birmingham, Dudley, Sandwell, Walsall, Wolverhampton, and Solihull, accounting for around 94% of bus journeys in the West Midlands.
Around £102m of assets will be transferred to a newly created company, known as West Midlands Bus Limited, which will operate as an arms-length managed operation, separate from WMCA.
The deal also sees around £78m of liabilities passed to the combined authority, including a pension fund and its electric vehicle contracts, although liability for historic insurance claims of around £5m will be retained by Mobico.
This week, WMCA issued an invitation to tender for the first tranche of the West Midlands bus franchising programme, marking the start of the formal procurement phase for the process it launched in May last year.
The combined authority says bus franchising will give it greater control over routes, fares, standards and service levels, with operators running services under contract.
Contracts will be awarded for the new franchise routes in the West Midlands from 2027 onwards.
