Management & Operations

National Express Buys ATC

Posted on January 7, 2000

Continuing the remarkable string of British public transport deals in the U.S., National Express Group, the leading mass passenger transport services provider in the U.K. has acquired the ATC Group, the largest privately owned public transit passenger services contractor in the US. Terms of the deal involved $172.5 million in cash, funded through National Express’ existing bank arrangements. The ATC Group currently operates transit service in 44 cities in 18 states. It generated an operating profit of $10.9 million in 1999 on revenues of $153.1 million. ATC, based in Chicago, is the principal subsidiary of the ATC Group and is the third largest provider of public transit bus services in the U.S. In 1999, ATC had a turnover of $139.1 million and employed 4,800 people, including 3,200 drivers. Its fleet of over 2,000 vehicles provides fixed-route bus services in 31 cities in 13 states, including Las Vegas, San Diego, Phoenix, Denver, Austin, Chicago, New Orleans and Raleigh. Intelitran, the smaller subsidiary of the ATC Group based in Pittsburgh, is the largest manager of paratransit bus operations in the country. It employs over 300 people who manage service under contract in 7 states. Intelitran has also developed paratransit scheduling and management software. It uses the software in-house as well as selling it to third parties. The ATC Group management team will continue to report to Terry Van Der Aa. He will report to Larry Durham, CEO of National Express’ North American division. The announcement comes in the wake of a remarkable string of deals involving U.S. and European public transport companies, particularly those from Britain. These have involved both operating companies (e.g., Stagecoach Holdings’ purchase of Coach USA and First Group’s purchase of Ryder/ATE) to manufacturer acquisitions (e.g., Henlys’ buy-out of Blue Bird) to technology transfer schemes between supplier firms (e.g., Robert Wright & Sons and Chance Coach and ElDorado National’s deal with MAN). "I am delighted with the acquisition of the ATC Group, which gives us critical mass and nationwide coverage in the important North American market," Phil White, Chief Executive of National Express said. "Together with our student transportation businesses, we now operate and manage almost 8,000 vehicles, employ 9,000 drivers, service 230 million passengers and have a turnover of more than $325 million per annum in North America. With our significantly enlarged North American division, we can also expect to benefit from substantial operating efficiencies. Both of the sectors in which we now operate have excellent prospects for further growth, both organically and by acquisition." The fixed-route, or scheduled, bus services sector, estimated to be worth over $9 billion per annum, is served by a total of over 40,000 vehicles, of which nearly 30,000 are located in urban areas, according to National Express estimates. Approximately 16% of scheduled bus services are currently contracted out to the private sector. According to a recent analysis by METRO Magazine, that slice is expected to grow further in this decade. The smaller paratransit sector is estimated to be worth around $800 million per annum and is served by a combination of small buses and vans, according to passenger needs. Approximately 80% of these services are currently contracted out to the private sector, National Express added. The total market has grown historically at about 4% per year this growth rate should continue in the foreseeable future.

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