Stagecoach North American assets sold to Los Angeles investment firm

A two-year-old investment firm now owns one of North America’s largest bus fleets after purchasing the North American assets of Stagecoach Group in a $271.4-million transaction.

Variant Equity Advisors of Los Angeles acquired 2,200 vehicles carrying the banners of Coach USA, megabus, Coach Canada and 25 other bus and motorcoach operators. The fleets employ about 4,500 people. The sale, completed on April 16, included $207 million in cash and assumption of $64.4 million in debt. Variant’s press release referred to its purchase as Coach USA Administration Inc. and named Linda Burtwistle the chief executive officer.

“We are proud of what we have been able to accomplish under Stagecoach’s ownership and are looking forward to building upon those successes,” said Burtwistle, who previously was president and chief operating officer of Coach USA.

“We are extremely excited to partner with Variant,” she said through the press release. “Their transportation and logistics experience, combined with their focus on driving technology into business, will allow us to accelerate our vision for the company as the market leader in sustainable, technology-enabled, value-priced transportation across the U.S. and Canada.”

The purchase is Variant’s third “corporate carve-out” in the last 18 months, said Managing Partner Farhaad Wadia.

“The combination of Coach USA’s unwavering commitment to providing safe and reliable transportation and Variant’s focus on providing corporate carve-outs with the technological, operational and financial resources required to accelerate innovation and growth will allow the company and its management team to unlock their full potential,” he said.

Stagecoach Group, headquartered in Perth, Scotland, operates bus, motorcoach, rail and tram services across the United Kingdom.

In its financial filing for the half-year ending Oct. 27, Stagecoach wrote down the value of its North American properties as $107 million. The company reported those businesses were profitable “but below our internal budget.”

An April 3 trading statement filed by Stagecoach said revenues for its North American businesses declined 1.4 percent in the 10-month period ending Feb. 28 and included a 1.9-percent drop for megabus.

The North American operation “has struggled in recent years due to fierce competition and rising staff and fuel costs,” reported a London financial newspaper. “It has also been hit by a national shortage of drivers in the bus and trucking sector, which has been pushing up the price companies like Stagecoach have to pay for people behind the wheel.”

The Dundee newspaper Courier reported on the Stagecoach sale under the headline, “American dream ends for bus giant Stagecoach.” It said the company’s stock price increased 15 percent the day after the sale was reported.

Transport analyst Gerald Khoo told the paper that the sale was sensible but the price was disappointing. “The group needed to get big or get out. Given the headwinds to demand from lower fuel prices making car travel and airline competitors competitive, growing megabus organically was challenging. Against that backdrop, exiting North America appears the better option.”

Stagecoach told investors it would use the proceeds from the Variant sale to reduce its debt load. Variant’s previous acquisitions were Curb Mobility of Long Island City, New York, which “provides a comprehensive mobility platform that serves taxi and other for-hire ride operators, regulators, service providers, and riders,” and Certegy Payment Solutions of St. Petersburg, Florida, ​”a leading provider of payment risk management and services to retailers and financial institutions.”

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