Mobico Shares Fall After Selling US School Bus Business
By Shashwat Awasthi
(Reuters) -British transport company Mobico's shares plunged 27% on Friday after it said it would sell its U.S. school bus business for a less than expected $608 million and expects 2024 earnings at the lower end of its guidance range.
The sale to infrastructure investor I Squared Capital comes months after the National Express owner launched the process to cut its more than 1 billion pound ($1.33 billion) debt pile.
The U.S. school bus operations had become too costly to run due to rising wages and potential tariff costs, Mobico said in a joint statement with I Squared Capital.
The sale includes upfront net proceeds of about $365-$385 million and an earn-out of up to $70 million depending on future performance, Mobico said.
However, Jefferies analysts said the $608 million valuation was below their expectation of between $650 million and $1.57 billion.
Mobico's shares sank as much as 27% to 43.66 pence and were set for their steepest one-day drop since October 2023.
The Birmingham-based company said it expects 2024 adjusted operating earnings at the lower end of its earlier forecast range of 185 million pounds to 205 million pounds, mainly due to challenges in its UK and German businesses.
It had issued a profit warning last year when it highlighted some accounting issues related to its German rail business.
Mobico was hit hard during the COVID-19 pandemic as lockdowns restricted travel and then by rising inflation, but has recently reported an uptick in financial performance due to passenger growth and higher pricing.
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Mrigank Dhaniwala and Susan Fenton)
