Coach operator National Express (NEX) has acquired a 60% stake in employee shuttle business WeDriveU for $84.3m in a bid to grow further in North America.

WeDriveU offers employee shuttle services to some of the largest Fortune 500 companies based in Silicon Valley and the San Francisco Bay Area.

It also operates in fast-growing cities such as Austin, Denver, Los Angeles, Portland and Seattle.

‘The transaction multiple of seven times earnings before interest, tax, depreciation and amortisation (EBITDA) on a rolling 12 months reflects the attractive growth and margin profile of the business,’ says Canaccord Genuity analyst Gert Zonneveld.

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Shares in National Express have risen 1.2% to 416.8p as the deal is earnings accretive from completion with the option to buy the rest of the stake over the next three years.

Despite a string of contract wins and strong trading, shares in the transport operator have advanced only 0.7% over the last year.

Zonneveld expects sustained profit growth in the coming years at National Express thanks to organic growth and acquisitions that should allow it maintain the progressive dividend policy.

$5BN MARKET OPPORTUNITY

WeDriveU is an attractive, asset-light business that transports nearly 7 million passengers annually.

In the year to 31 December, the firm generated sales of $139.9m and normalised EBITDA of $21.1m.

National Express will use WeDriveU to form a new shuttle division in its North American business to expand into the employee, university and hospital shuttle markets, which are already worth over $5bn in annual sales.


Issue Date: 12 Apr 2019