Partner Article

Arriva in talks with French firm SNCF

Transport group Arriva is in talks with French railway operator SNCF over a deal which could see it merge with - or acquire - one of its subsidiaries.

The Wearside firm said it had entered preliminary discussions with state-owned SNCF over the possibility of taking over, or joining forces with, transport company Keolis.

Keolis operates passenger transport systems for in eight European countries as well as Algeria, Australia and Canada.

It specialises in automatic metro trains, runs the largest bus and coach fleet in France and also runs trams and railway networks.

SNCF is part of a joint-partnership which owns a major share in the company.

It remains to be seen how big a share of the company Arriva is keen to acquire, and the firm has moved quickly to underline the preliminary nature of the discussions.

An Arriva statement said: “The Company confirms that it has held very preliminary discussions with SNCF regarding a possible contribution of all or part of Keolis’ transportation business to Arriva to create a significantly enhanced and leading European transportation business focused on the increasing liberalisation of the transportation market in Europe.

“The Board affirms that discussions are at a preliminary exploratory stage and there is no certainty that any agreement will be reached.”

Gary Fawcett, an analyst at Brewin Dolphin in Newcastle, said the most likely outcome of the talks would be a merger that creates a huge transport operation.

He said: “This would be a very good deal for Arriva if they can seal the merger. The market has certainly taken this positively with the shares rising over 3%. Arriva’s strategy for a number of years has been to grow its European division and this deal would fast track its ambitions.

“The UK Company currently employs around 44,000 people spread across 12 countries. This compares with a 36,000 strong workforce in 11 countries for Keolis. Revenues of about £3bn per year are the same for both companies.

“A merger of equals is a more likely outcome than a complete takeover due to the size of Keolis and the fact that it is 45% owned by the French state. However, given the current climate there is no certainty that any deal will go ahead.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .