Mobico Group (LON: MCG), the transport operator that runs bus, coach and rail services across the UK, Germany, Spain and North America, said earlier today it has reached an agreement in principle to sell its West Midlands bus business to the West Midlands Combined Authority (WMCA), the regional public transport body overseeing the area’s shift to a franchised bus network. Shares showed only a modest reaction to the news.
The stock traded at 26.22p in early trade today, down 0.68% from yesterday’s close of 26.40p, and sits within a 52-week range of 17.06p to 35.96p. The shares had been trading above both their 50-day average of 24.62p and 200-day average of 23.29p heading into the announcement.
Under the deal, Mobico expects net upfront proceeds of roughly £24 million, after a headline asset value of about £102 million, mainly depots and diesel buses, is offset by around £78 million of liabilities the WMCA will assume, including the unit’s pension fund and electric vehicle contracts. A further £5.5 million of deferred consideration is due in 2027 and 2029, the second tranche tied to vacant possession, meaning full clearance and handover, of the Birmingham Central depot. Completion is expected around November this year, subject to a completion accounts mechanism that finalises the price once the pension liability is revalued. BofA Securities is advising Mobico on the transaction, with Freshfields acting as legal adviser.
The sale reflects years of break-even performance at the unit, which generated revenue of £338 million but adjusted operating profit, profit excluding one-off items, of just £2 million over the 15 months to March 2026, a business that has leaned heavily on local-authority funding. The WMCA’s decision in May 2025 to move from a deregulated bus market to a franchising model, where the authority sets routes and fares and contracts operators to run them, made a sale of Mobico’s roughly 1,400-bus, 120-million-journey network the structural end point. Mobico said the deal is not expected to materially affect group earnings.
Phil White, Executive Chair of Mobico, said: “This agreement is another significant milestone in making Mobico simpler and stronger while substantially de-risking the group. UK Bus has been break-even for a number of years and the uncertainty of future franchising in the area presented a significant headwind for the group in managing the cost base and liabilities of the business going forward. As the West Midlands moves toward a franchised network, WMCA is the logical buyer to facilitate that transition. The transaction represents fair value for the assets and liabilities of UK Bus while providing certainty for our colleagues upon completion.”
The disposal continues a broader retreat from low-margin, subsidy-dependent transport operations that Mobico has pursued in recent years as it reshapes its portfolio toward higher-return businesses.
The West Midlands franchising rollout is expected to be complete by the end of 2029, the point at which the final deferred payment tied to the Birmingham depot falls due.