Author Topic: National Express acquires Petermann Partners, Inc. for $200 million  (Read 1187 times)

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National Express acquires Petermann Partners, Inc. for $200 million

- Acquisition of 5th largest provider of student transportation services in the US
- Earnings accretive from the outset
- Strengthens National Express’ position in the US student transportation market, adding over 3,300 vehicles and thereby increasing fleet size by 20%
- Petermann is the market leader in its home state, Ohio, and has operations across 10 states in the Midwest, West and Southwest
- Transaction consideration of $200 million on a cash and debt free basis
- Funded from existing credit facilities and cash

National Express Group PLC (“National Express” or the “Group”) today announces that it has signed a definitive agreement to acquire Petermann Partners, Inc. (“Petermann”) from Macquarie Global Opportunities Partners, L.P. (“MGOP”) and Petermann management.  The acquisition will be made by a wholly-owned subsidiary of National Express for a cash consideration of $200 million, on a cash and debt free basis (with a working capital adjustment at closing).  The acquisition is expected to complete in Q4 2011, subject to receipt of the relevant regulatory approvals1.  The transaction is expected to result in the Group’s Net Debt / EBITDA ratio increasing by 0.32. It is expected that the acquisition will be immediately earnings accretive.
Petermann is the 5th largest provider of student transportation in the US, with a presence in the paratransit market. Headquartered in Cincinnati, Ohio, Petermann is the market leader in its home state and has further operations across 10 states in the Midwest, West, and Southwest. Petermann operates out of 66 locations with 3,351 vehicles in its fleet. For the fiscal year ending 30 June 2011, Petermann generated revenue of $149.9 million, normalised EBITDA of $29.3 million, normalised operating profit of $13.5 million, and had gross assets at 30 June 2011 of $254.5 million3.
National Express has continued successfully to deliver on the strategy articulated at the Group’s first half 2011 results.  Following the recovery in margins and the return to organic growth achieved by the Group, the acquisition of Petermann represents a targeted expansion by National Express in the structurally attractive US student transportation market.  Since its founding in 1999, Petermann has developed a strong track record of growth, driven by new contract wins and bolt-on acquisitions. Petermann’s strategy is characterised by a focus on safety, operational excellence, customer service and employee satisfaction and, with its high quality, well-invested fleet, it represents an excellent fit with the Group’s current student transportation business in the United States and Canada, and will enhance the broader Group.
Dean Finch, Group Chief Executive of National Express, said: “We are delighted to acquire such a high quality business in Petermann.  Our recent improved performance has enabled us to take advantage of this opportunity. It’s a great strategic fit for our existing school bus business, complementing our current operations, introducing us to new states and giving us a foothold in the paratransit market.  This is an important step in delivering our strategy of growth in North America.”
Pete Settle, President and CEO of Petermann, said: “We are pleased to have this opportunity to join the National Express Group.  Since its founding over 12 years ago, Petermann has grown to become one of the largest student transportation businesses in the US. The combination with National Express will provide us with an even greater opportunity to continue the strong growth in the business, and we look forward to working with Dean and his team.”

There will be a conference call for investors and analysts at 10:00am on 13 September 2011. Details are available from Rebecca Mitchell at Maitland.

1 In the unlikely event that relevant regulatory approvals are not received, a break-fee would be payable by the Group in line with customary practice.
2 On a pro forma basis for the 12 months ending 30 June 2011
3 Normalised operating profit is defined as operating profit plus amortisation of $4.6m and exceptional deal and restructuring costs of $0.7m.

Normalised EBITDA is defined as normalised operating profit plus depreciation of $15.8m. The financial results for year ended 30 June 2011 are unaudited.
National Express currently has 16,475 buses at 175 locations serving the North American student transportation business.