Arriva, the bus and train operator, is being acquired by Germany's Deutsche Bahn in a £1.585bn deal that will create a major passenger transport firm.
Deutsche Bahn told the City this morning that it will pay 775p per share to take control of Arriva. Arriva's board has accepted the offer, which is a 34% premium on its value prior to Deutsche Bahn's first approach a month ago. Shareholders will also get an 18p dividend.
Rumours of the deal were floating around the City last night, and Deutche Bahn announced its success before trading began in London this morning.
The deal means that Deutche Bahn has triumphed over French rival SNCF, which had hoped to merge with Arriva. It may trigger a wave of consolidation across the UK transport sector.
Arriva runs the CrossCountry rail franchise, as well as pretty much all the trains in Wales. It also operates bus services in Liverpool, Leeds, Leicester, Glasgow and Newcastle, as well as around a fifth of London's buses.
It also operates transport services in another 11 European countries, making it attractive to Deutsche Bahn, which is owned by the German state and keen to expand.
As Dr Rüdiger Grube, chief executive officer of Deutsche Bahn, put it:
Arriva's activities will strengthen Deutsche Bahn's strategic positioning in Europe, principally through Arriva's successful targeting of Europe's increasingly liberalised and fast growing transport markets which are of strategic interest to Deutsche Bahn. Arriva will give Deutsche Bahn the platform to expand in Europe and enhance its position as one of Europe's leading passenger transport groups.
There has been speculation of a rival bid from SNCF, but Sir Richard Broadbent, chairman of Arriva, said Deutsche Bahn's offer "fully reflects the value of the business".
In other City news this morning.... house builder Persimmon has said that sales are 20% higher than a year ago.
Sports Direct has said it is on track to hit earnings targets for this year after healthy trading over Easter.
And WH Smith has posted a 2% jump in profits in the last six months, and predicted that the UK flight disruption will not have a material impact on its trading.
