Citylink takes road south to Metroline

One well-placed source revealed there were ''some marginally higher offers''.

And an executive with one of the disappointed bidders, who declined to be identified, speculated yesterday that National Express had opted for Metroline because it did not pose as much of a threat as larger rivals.

''Metroline are not a direct competitor for National Express in Scotland. In reading between the lines, I am guessing that they probably preferred Metroline as someone completely different,'' he said.

But National Express's finance director, Colin Child, retorted: ''That wasn't an issue at all. I would be surprised if anyone really thought that. The big issue was satisfying the competition issues with the OFT (Office of Fair Trading).''

The Government ordered National Express to dispose of Citylink in December last year in return for allowing it to retain its seven-year franchise for running ScotRail, which provides much of Scotland's passenger train services. It then extended the timeframe beyond the original June 16 deadline to allow competition authorities to look at potential buyers.

In a parallel deal also announced yesterday, National Express has sold Highland Country Buses to Inverness-based bus and coach operator Rapsons for #4.0m. It was Rapsons which sold this business to National Express for #1.8m in January 1996 and the English company will book a gain of about #2.2m.

Highland Country operates bus services throughout the Highlands, from depots at Aviemore, Fort William, Portree, and Thurso. Its disposal was not required by the Monopolies & Mergers Commission (MMC) but National Express did not want this operation without Citylink.

The MMC identified nine trunk routes where there was overlap between ScotRail and Citylink services. The two operations battle for passengers on the busy Glasgow-Edinburgh route, on which Citylink runs buses every 15 minutes at peak times.

Bus industry sources said Stagecoach, FirstGroup, and Go-Ahead Group had been very interested in Citylink. Sunderland-based Arriva (formerly Cowie) may have been. It is almost certain to have been major Scottish players Stagecoach and FirstGroup which caused the OFT concern.

Back in April, there was speculation Stagecoach was the front-runner.

Chris Moyes, commercial director of Newcastle-based Go-Ahead, said it had bid but its offer was lower than Metroline's.

A FirstGroup spokesman confirmed it had bid but declined to say at what level.

Keith Cochrane, Stagecoach's finance director, would not comment.

Metroline and National Express will co-operate closely. Middlesex-based Metroline will pay National Express another #200,000 in the first year following the acquisition - to cover situations where passengers buy tickets from Citylink but use National Express buses running on the same routes. ''Up to the same amount'' will be paid in each of the next two years.

Metroline and National Express will provide through-ticketing, so travellers can still connect easily between the latter's Anglo-Scottish buses and express services in Scotland.

Commenting on its victory, Metroline's chief executive, Declan O'Farrell, pointed out it did ''not provide any regulatory problems'' because it only operated in London before now. He also flagged up hopes for a close relationship with National Express.

He added that the 70 jobs at Citylink - 50 of them in Glasgow - would be safe because Metroline had no other Scottish operations.

Metroline started life as a management and employee buy-out when London's bus companies were privatised in 1994. It floated on the stock market last year and has just doubled its share of the London bus market from 7% to 14% through the #41m acquisition of London Northern from Merseyside-based MTL.

It now employs 2500 people and runs 900 vehicles. In its last financial year to October 1997, it made pre-tax profits of #4.3m on turnover of #36.4m.

Citylink made profits of #1.9m on turnover of #11.9m during the year to December. As well as its lucrative Glasgow-Edinburgh service, Citylink also serves the likes of Perth, Inverness, Aberdeen, Oban, and Fort William.

It runs 80 coaches every day. These are provided by external contractors and cover about 180,000 miles-a-week in summer and about 150,000 in winter. National Express paid #5.3m for Scottish Citylink in May 1993, buying it from a management and employee buy-out team which had acquired it in 1990 when the Scottish Bus Group was privatised.

Highland Country and Citylink will maintain close links under their new ownership.

Freda Rapson, the former wife of Rapsons' chief executive, Sandy Rapson, heads up Citylink.

Alasdair Macdonald, operations manager of the family-owned Rapsons, said she would have an input to the running of the enlarged Inverness-based group. Rapsons has recently derived about half its turnover by operating buses for Citylink. The remainder was split equally between local bus services in and around Inverness and private hire.

Highland Country also operates as a contractor for Citylink and provides rural bus services. It has no vehicles in Inverness.

Rapsons, which runs its existing local bus services under the Highland Bus & Coach name, is more than doubling in size through the acquisition of Highland Country. The new addition has annualised sales of #2.8m. Macdonald said it was acquiring the operation from National Express to ''consolidate our position in the Highlands'' and added that the purchase was being funded by the individuals who own the company.

nSTAGECOACH yesterday announced it had completed its NZ$111.6m (#33.5m) acquisition of Yellow Bus in Auckland, following its previously-announced victory in the company's privatisation auction.

Yellow Bus, with 530 vehicles and 930 employees, is New Zealand's largest bus company.