Mobico Group PLC
18 August 2026
FOR IMMEDIATE RELEASE
18 August 2026
Mobico Group PLC ('Mobico' or the 'Company' or the 'Group')
Proposed Sale of UK Bus to the West Midlands Combined Authority
Mobico today announces that it has reached an agreement in principle for the sale of the net assets and operations of its West Midlands bus business ('UK Bus's) to the West Midlands Combined Authority ('WMCA') for expected upfront residual proceeds of approximately £24 million after deductions for transferred liabilities (the 'Transaction').
The Transaction is in line with the Group's strategy to monetise its UK Bus assets, and substantially de-risks the Group from the forthcoming uncertainty of franchising in the area over the coming years.
Transaction summary
· Headline asset value of approximately £102 million comprising primarily of the UK Bus depots and diesel fleet, broadly in line with book value, and £6.5 million of cash retained for operating purposes
· Total value deductions of approximately £78 million for the transfer of UK Bus liabilities, including primarily the UK Bus pension and the transfer of the electric vehicle contracts (based on current estimated market pricing), as well as additional recruitment and fuel hedging costs
· Expected upfront residual proceeds of around £24 million, subject to a customary completion accounts mechanism including a final revaluation of the pension liability
· Further deferred consideration of £5.5 million, with half payable at the end of 2027 and half payable on vacant possession of the Birmingham Central depot expected at the end of 2029
· Mobico is required to undertake an internal reorganisation prior to completion of the Transaction to transfer the assets and operations of UK Bus into a new legal entity ('Newco') (the 'Reorganisation') - the Transaction is expected to close around November 2026 ('Completion')
· Over recent years the business has been heavily supported by local authority network funding and only delivered broadly break-even profitability, and the Transaction is therefore expected to be broadly neutral to earnings going forward and to 2026 covenant gearing
· The Group retains a net liability for historical insurance claims of approximately £5 million (as at 31 March 2026)
Transaction rationale
· The Transaction significantly de-risks the Group from the potential to lose market share in the forthcoming franchising process, crystallises value for its assets today broadly in line with book value, whilst providing a clean transfer of the Group's operations, employees, cost base and other liabilities
· The Transaction provides WMCA with full control of the network, assets and operations of the business significantly de-risking and facilitating the path to franchising in the area
Phil White, Executive Chair of Mobico, commented:
"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."
Background to the Transaction
The Group has operated the majority of urban bus services in and around the West Midlands for around 40 years. In that time the network and fleet have been significantly modernised, including the introduction of fully electric vehicles in recent years. Today the business runs approximately 1,400 buses, approximately 120 million passenger journeys and an annual service mileage of approximately 54 million miles.
In May 2025, the West Midlands approved the move from deregulated bus services to a franchising model in the area, with a transitional period running through to full rollout by the end of 2029, creating significant uncertainty for the long-term future of the UK Bus business.
Over recent years, the costs of running the business have also increased substantially and, in a funding-constrained environment, this has resulted in the business running at a broadly break-even level of profitability for a number of years as well as being heavily reliant on local authority network funding.
As such, Mobico took the decision to explore opportunities to monetise the assets of the UK Bus business whilst being mindful of its cost base and liabilities including its pension fund and long-term electric vehicle contracts. In light of this, WMCA was seen as a highly credible buyer for the business, including for its assets which would likely have been sold to WMCA over the coming years in the shift to franchising.
Further Transaction Details
The negotiated valuation reflects both parties' assessment of the market value of the assets of the business (as at 30 September 2026, being the indicative 'Valuation Date'), a deduction for the pension liability, an assessment of the current market value of the substantial electric vehicle contracts of UK Bus (in a market that has seen the cost of electric vehicles falling over recent years), and other deductions including additional recruitment and fuel hedging costs.
The deduction for the pension liability is to be effected via a cash injection into the pension fund based on the liability measured at 30 June 2026 and is subject to a final revaluation at Completion of the Transaction (but which is not expected to result in a further adjustment to the consideration). UK Bus is scheduled to make its next regular contribution into the pension fund of £9.5 million on 1 October 2026, which, if Completion of the Transaction is beyond this date as expected, would be added to the consideration and the injection into the pension fund reduced accordingly.
A customary completion accounts mechanism will be undertaken as soon as possible following Completion which is expected around November 2026. The completion mechanism includes a deduction for further depreciation for the period between the indicative Valuation Date and the date of Completion (but which should be broadly offset by positive cash flow generation in the same period).
Further contingent consideration of £9.9 million is payable to Mobico in the unlikely event that WMCA reverses or ceases actively progressing the move to franchising prior to May 2028.
For the 15 months to 31 March 2026, UK Bus generated revenue of £338 million, Adj. EBITDA of £23 million and Adj. Operating Profit of £2 million. Excluding the profit on disposal of assets (comprising primarily of two depots to WMCA in late 2025), UK Bus was marginally loss-making.
The net assets of the business as at 31 March 2026 were approximately £31 million including the retained cash and pension liability, which had an IAS19 net deficit of £53 million as at 31 March 2026. Newco will be held-for-sale in the Group's next published balance sheet at a value reflecting the expected net proceeds from the Transaction, and any non-cash impairment calculated accordingly.
UK Bus is expected to be broadly break-even during 2026 through to Completion of the Transaction at an operating profit level.
The Transaction includes the transfer of IFRS16 lease liabilities (included in the Group's reported net debt) of approximately £25 million (as at 31 March 2026) with no value adjustment.
The Group retains a net liability for historical insurance claims of approximately £5 million (as at 31 March 2026).
For further information
Mobico Group PLC
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Investor Relations |
Headland
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Matt Denham & Henry Wallers |
020 3805 4822 |
Legal Entity Identifier: 213800A8IQEMY8PA5X34.
BofA Securities is acting as financial adviser and Freshfields is acting as legal adviser to Mobico in connection with the Transaction.
Further Information
The Transaction is a significant transaction for Mobico for the purposes of the Listing Rules of the Financial Conduct Authority and is therefore notifiable under UKLR 7.
The net proceeds will be reinvested in the business of the Group. Given UK Bus has delivered broadly break-even profitability, there is not expected to be a material impact on the Group's earnings going forward.
The Mobico Board has unanimously approved the Transaction and believes the terms of the Transaction are in the best interests of Mobico shareholders as a whole.
Risks relating to the Transaction
The Transaction is subject to completion of the Reorganisation. There can be no assurance that the Reorganisation will be completed and, accordingly, Completion taking place. If Completion does not occur, Mobico will not receive the net cash proceeds. Further, other costs incurred by Mobico in connection with the Transaction (such as legal, other advisory fees and administrative costs) would be incurred without the receipt of those net cash proceeds.
The Framework Agreement and the SPA contain obligations in the form of warranties, indemnities, a tax covenant, certain pre-Completion undertakings and certain customary post-Completion restrictive covenants in favour of WMCA. Mobico has taken steps to minimise the risk of liability through customary limitations on liability (including a £1 million cap on Mobico's liability with respect to the warranties and the tax covenant) and has sought to ensure that the restrictive covenants will not impact the Mobico business as otherwise currently carried on. However, the limitations on liability will not apply in all scenarios and any liability to make a payment arising from a successful claim by WMCA under the Framework Agreement or the SPA could reduce the consideration and have an adverse effect on the Mobico business, results of operations, prospects and financial condition.
Mobico has undertaken a customary disclosure process to minimise the risk of liability under these provisions and WMCA intends to put in place a policy of warranty and indemnity insurance ('W&I Insurance') in respect of such liabilities typical for a transaction of this nature. However, such W&I Insurance may be insufficient or may not operate so as to preclude the possibility of claims being made against Mobico.
Risks to Mobico as a result of the Transaction
Following the Transaction, the retained group will have greater concentration risk, holding fewer asset classes, and will therefore be more susceptible to adverse developments in the remaining markets, asset classes and segments in which the retained group operates. Therefore, should any part of the retained group underperform, this may have a larger relative impact on its financial condition, results, profitability, and/or future prospects than it would have had on the entire Group before the Transaction.
The geographical distribution of the retained Group's revenue after the Transaction will also be different to that of the Group as at the date of this announcement. This means that adverse financial market movements or economic conditions in the region and/or in one of the markets in which the retained group operates may have a larger relative impact on the financial condition, results, profitability and/or future prospects of the retained group than they would have done prior to the Transaction.
The Transaction includes the potential for deferred consideration. There is a risk that Mobico does not receive all of the deferred consideration.
The Transaction has also required, and will continue to require, substantial amounts of time and focus from the management teams and employees of the Group which could otherwise be spent operating the Group in the ordinary course. Key managers and employees may become distracted by the Transaction and, accordingly, decision-making by the Group may be delayed, deferred or otherwise impacted. This disruption could be prolonged if Completion of the Transaction is materially delayed.
Current Trading for the Group
Since 31 March 2026, being the Group's last published audited financial statements, trading across the Group has remained in line with the Board's expectations.
Financial Information on UK Bus
Underlying measures are reported below as they provide both management and stakeholders with useful additional information about the financial performance of the UK Bus business.
Summary Adjusted Profit and Loss Account
|
£m |
12 Months to 31-Dec-2024 |
15 Months to 31-Mar-2026 |
|
Revenue |
265.5 |
337.8 |
|
Operating costs |
(245.1) |
(318.5) |
|
Exceptional items |
(7.0) |
(0.4) |
|
Profit on disposal |
4.5 |
4.5 |
|
EBITDA |
17.9 |
23.4 |
|
D&A and other non-cash items |
(18.1) |
(21.3) |
|
Operating profit |
(0.2) |
2.1 |
Summary Balance Sheet
|
£m |
31-Mar-2026 |
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Tangible assets (owned depots & fleet) |
101.8 |
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Tangible assets (fixtures & fittings) |
14.4 |
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Tangible assets (leased) |
21.8 |
|
Total tangible assets |
138.0 |
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Other assets |
50.6 |
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Total assets |
188.6 |
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Total liabilities (including the pension deficit) |
(157.5) |
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Net assets |
31.1 |
Sources of information
Unless otherwise stated, all financial information relating to UK Bus disclosed in this announcement has been extracted, without material adjustment (subject to the exceptions noted below), from the consolidated published audited financial statements of the Group for the 12 months ending 31 December 2024 and 15 months ending 31 March 2026.
The financial information relating to UK Bus disclosed in this announcement has been adjusted to remove intercompany balances between UK Bus and the retained group. These intercompany balances are expected to be settled or waived prior to or at completion of the Transaction. The financial information relating to UK Bus disclosed in this announcement has also been adjusted for transaction perimeter adjustments including the removal of the UK Bus claims provision, which will be retained by the retained group at completion of the Transaction.
Related Party Transactions
Other than those matters disclosed in previously published Annual Reports and Financial Statements of the Group and/or otherwise disclosed in this announcement, there were no related party transactions (within the meaning ascribed to that term in UK-adopted international accounting standards) entered into by Mobico during the period commencing on 1 January 2023 and terminating on the date of this announcement which are relevant to the Transaction.
Aggregated Transactions
The Company entered into two property transactions with WMCA in December 2025 for a total value of £6.7 million, which are required to be aggregated for the purpose of UKLR 7.2.11 R.
No Significant Change
There has been no significant change in the financial performance or financial position of the retained group or UK Bus since 31 March 2026, being the end of the last financial period for which financial information of Mobico and UK Bus has been published.
Legal and Arbitrational Proceedings
There are no governmental, legal or arbitration proceedings (including any such proceedings which are pending or threatened of which the Company is aware) during the period covering the 12 months prior to the date of this announcement which may have, or have had in the recent past, significant effects on the financial position or profitability of Mobico or UK Bus.
Material Contracts
Other than as disclosed in the Annual Reports and Financial Statements of the Group for the 15 months ending 31 March 2026, or as set out in the agreements relating to the proposed Transaction (a summary of the principal terms of which is set out in Appendix 1 of this announcement), there are no contracts that have been entered into by the Company or the Group (not being contracts entered into in the ordinary course of business): (i) within the period of two years immediately preceding the date of this announcement that are, or may be, material to the Company or the Group; or (ii) that contain any provisions under which the Company or the Group has any obligation or entitlement that is material to the Company or the Group.
IMPORTANT NOTICE
Certain statements contained in this announcement may constitute "forward-looking statements" with respect to the financial condition, performance, strategic initiatives, objectives, results of operations and business of the Group. All statements other than statements of historical facts included in this announcement are, or may be deemed to be, forward-looking statements. Without limitation, any statements preceded or followed by or that include the words ''targets'', ''plans'', ''believes'', ''expects'', ''aims'', ''intends'', ''anticipates'', ''estimates'', ''projects'', ''will'', ''may'', "would", "could" or "should", or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; and (ii) business and management strategies and the expansion and growth of the Group's operations. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results, performance or achievements to differ materially from those projected or implied in any forward-looking statements. The important factors that could cause the Group's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, economic and business cycles, the terms and conditions of the Group's financing arrangements, foreign currency rate fluctuations, competition in the Group's principal markets, acquisitions or disposals of businesses or assets and trends in the Group's principal industries. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur. The forward-looking statements contained in this announcement speak only as of the date of this announcement.
Cautionary Statement
This announcement is not intended to, and does not constitute, or form part of, any offer to sell or an invitation to purchase or subscribe for any securities or a solicitation of any vote or approval in any jurisdiction.
Important Notices Relating to the Financial Advisers
Merrill Lynch International ('BofA Securities'), a subsidiary of Bank of America Corporation, which is authorised by the Prudential Regulation Authority (the 'PRA') and regulated by the Financial Conduct Authority (the 'FCA') and the PRA in the United Kingdom, is acting exclusively for Mobico in connection with the matters referred to in this announcement and for no one else and will not be responsible to anyone other than Mobico for providing the protections afforded to its clients or for providing advice in relation to the matters referred to in this announcement. Neither BofA Securities, nor any of its affiliates, owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of BofA Securities in connection with this announcement, any statement contained herein or otherwise.
Appendix 1 - Summary of the principal terms of the Transaction
1. The Framework Agreement
1.1 Parties and structure
The Company and WMCA have entered into a framework agreement which governs the terms of the Transaction (the 'Framework Agreement'). The Framework Agreement provides an irrevocable and unconditional option to (i) WMCA to require the Company to sell the shares in Newco and (ii) the Company to require WMCA to purchase the shares in Newco, in each case on the terms, and subject to the conditions, set out in the SPA (each, an 'Option'). Exercise of an Option will be conditional on completion of certain key steps of the Reorganisation.
1.2 Undertakings
The Framework Agreement includes customary covenants on the Company from the date of the Framework Agreement to completion of the proposed Transaction ('Completion'), including to ensure that the affairs of UK Bus are conducted in the ordinary and usual course of business, subject to certain exceptions.
The Company has also undertaken to use all reasonable endeavours to implement the Reorganisation as soon as reasonably practicable following the date of the Framework Agreement.
1.3 Termination
If Completion has not occurred by the 31 March 2027 (or such later date as the Company and WMCA may agree in writing) (the 'Longstop Date'), each of the Company and WMCA is entitled to terminate the Framework Agreement by providing notice to the other party.
WMCA may also terminate the Framework Agreement if certain key steps of the Reorganisation are not completed by the Longstop Date and either Party may terminate in the event of certain unremedied material operational or other loss events.
1.4 Governing law
The Framework Agreement is governed by English law, with any disputes arising in connection therewith subject to the exclusive jurisdiction of the English courts.
2. SPA
2.1 Parties and structure
The Proposed Transaction will be governed by the sale and purchase agreement (the 'SPA'), which will be entered into by the Company and WMCA following exercise of an Option. Under the terms of the SPA, the Company will sell and WMCA will purchase the entire issued share capital of Newco. Completion is expected to occur around November 2026.
2.2 Consideration
The upfront residual net proceeds for the Transaction are expected to be around £24 million, subject to a customary completion accounts mechanism including a final revaluation of the pension as at 30 June 2026. The consideration is payable on Completion.
The Company will also be entitled to receive further deferred consideration of £5.5 million, with half payable at the end of 2027 and half payable on vacant possession of the Birmingham Central depot expected at the end of 2029.
There is also a potential further payment of £9.9 million in the event WMCA reverses or ceases actively progressing franchising of the bus network prior to May 2028, payable in July 2028.
2.3 Restrictive covenants
The Company will agree to customary non-solicitation obligations and a non-compete obligation, in each case for a period of two years after Completion.
2.4 Warranties, Indemnities and Tax Covenant
The Company has given customary fundamental warranties relating to its title to the shares in Newco, as well as to its own capacity and authority. The Company has also given customary business and tax warranties and a tax covenant in favour of WMCA. The Company has given the warranties as at the date of the Framework Agreement and these will be repeated at Completion. Warranty and indemnity insurance is in place in respect of all warranties and the tax covenant given by the Company under the SPA. The warranties are subject to customary limitations, including with regards to quantum and time periods.
The Company has also provided specific indemnities in favour of WMCA and Newco, including in respect of the Reorganisation, employment, certain tax matters, and excluded liabilities.
2.5 Governing law
The SPA is governed by English law, with any disputes arising in connection therewith subject to the exclusive jurisdiction of the English courts.
3. TSA
At Completion, the Company and Newco will enter into a transitional services agreement (the 'TSA') relating to transitional services to be provided or procured by the Company to Newco for a transitional period following Completion.
4. Other transaction documents
The Company has also entered into certain other agreements to effect the Reorganisation, including the transfer of the assets and certain liabilities (including pension liabilities) of UK Bus to Newco.
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