Stagecoach in Scandinavian bus takeover

Stagecoach, fresh from announcing record profits earlier this week, yesterday said it was in the final stages of taking control of Swebus AB, the largest bus company in the Nordic region.

The company, which runs 8,300 buses in the UK and abroad, is set to take over Swebus if final negotiations are successful.

The two companies signed a letter of intent yesterday but Swebus, which is owned by the Swedish national railways, retains the right to talk to other bidders should the negotiations break down. Swedish analysts have valued the company at SKr1bn-SKr1.5bn (pounds 100m-pounds 150m). Last year, it made a profit of SKr111m on a turnover of SKr3.2bn.

Swebus has 3,500 buses, and operates in Norway, Denmark and Finland as well as Sweden. The privatisation was forced on Swedish railways by the Swedish government, which wants the organisation to focus on rail services.

The acquisition will be Stagecoach's first in northern Europe, although the company already operates buses in several countries including New Zealand, Malawi, Kenya, and Portugal.

Stagecoach is thought to have beaten off competition from the French CGEA, FirstBus, and a Swedish holding company.

News of the pending Swebus deal helped shares in Stagecoach to buck the depressed stock market yesterday.

But while Stagecoach's shares climbed by 16p to 456p, just 1p below the high for this year, the price of FirstBus eased by 5p to stand at 146p - only 5p above this year's low.

The purchase fits in with the expansion plans that chairman Brian Souter announced earlier this week in presenting the annual figures, which showed the company making profits of pounds 43.6m from turnover of slightly more than pounds 500m.

Mr Souter said he wanted to increase Stagecoach's turnover to pounds 2bn by the end of the decade, compared with its current annualised level of around pounds 770m. Mr Souter expressed doubts about buying many more British bus companies as he felt prices were too high.