STAGECOACH Group, owned by Brian Souter, is paying £2 million to further expand its bus operations in Manchester.

The Perth firm's subsidiary, Greater Manchester Buses South, has agreed terms on a deal to acquire private operator Bluebird.

The transaction is subject to approval from the Office of Fair Trading but Stagecoach is hopeful of completing the arrangement in the first quarter of 2013.

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All 80 Bluebird staff are expected to transfer across under TUPE.

As well as 40 vehicles, Bluebird's assets include a leased depot site at Middleton, near Rochdale.

In the 12 months to January 31 the business, founded in 1988, had revenue of £4m and operating profit of £330,000.

Les Warneford, managing director of Stagecoach UK Bus, said: "This is a good fit with our existing successful bus network in Greater Manchester. We believe there is scope to develop the business and attract more customers to bus travel through our good value fares and high quality of service."

Stagecoach Manchester carries almost 100 million passengers every year on its 630 buses and employs 1850 staff.

The latest plan for expansion in the region comes just a week after Stagecoach agreed to takeover FirstGroup's bus operations in Wigan in a £12m deal.

That deal is unlikely to worry regulators as Stagecoach has previously had no presence in Wigan.