Press releases

Arriva plc today announced the acquisition of a further 10 per cent interest in Barraqueiro SGPS SA (Barraqueiro), the leading Portuguese passenger transport operator, for a consideration of €50 million in cash (approximately £34 million).  This builds on Arriva’s acquisition of 21.5 per cent of Barraqueiro in May, 2006.

The acquisition has been effected by purchasing 10 per cent of the shares in Barraqueiro’s holding company, GB Barraqueiro Holdings SGPS SA.

Barraqueiro is the largest passenger transport operator in Portugal, with more than 4,800 employees, almost 2,200 buses, and 18 train sets. It has key bus operating territories in the south of the country, and in and around Lisbon; Fertagus, a fast-growing commuter rail operation in Lisbon; and a 34 per cent participation in the recently-opened metro system to the south of the city. It has about 20 per cent of the Portuguese bus market, and is the country’s only private passenger rail operator. It also has a relatively small, currently loss-making, freight business.  Revenue growth has been strong since Arriva made its first investment.  Arriva is entitled to appoint three directors to the 12-person board of Barraqueiro.
 
In the year ended 31 December 2006, adjusted for Arriva’s accounting policies, prepared under IFRS, Barraqueiro had revenue of €260 million, EBITDA of €45.3 million and operating profit of €26.6 million.  In the six months to 30 June 2007 its revenue was €142 million, EBITDA was €27.8 million and operating profit was €18.4 million.

Arriva anticipates the transaction will have negligible impact on 2008 earnings.

As part of the agreement Arriva has replaced its previously negotiated put option in relation to its 21.5 per cent tranche of Barraqueiro shares with a new option to re-integrate its wholly-owned subsidiary Transportes Sul do Tejo (TST) into Barraqueiro, at a similar earnings multiple to that of the acquisition announced today. TST operates more than 600 buses on the Setubal peninsula south of Lisbon and was acquired by Arriva from Barraqeiro in two stages in 2002 and 2003.

The agreement will have no immediate impact on Arriva’s TST business and will not affect the Arriva Portugal inter-urban bus and coach services, which are operated by 230 vehicles in the north of the country.

David Martin, chief executive of Arriva, said: “Since making our first investment in Barraqueiro, and adding an Arriva presence to its board in 2006, we have been delighted with the progress that the company has made, and the quality of its management.  Long distance passenger revenue has grown substantially, and we continue to be encouraged by the prospects for the business. Increasing our investment and laying the groundwork for the future re-integration of TST provides us with a clear joint roadmap for developing further Arriva’s involvement in Portugal’s evolving public transport market.”