Stagecoach buy a done deal, says Infratil

As well as some 900 buses, Infratil is buying the Fullers fleet's seven ferries. Picture / Paul Estcourt

Infratil says it will pay $250.5 million for the New Zealand bus and ferry operations of British company Stagecoach.

News last night that the deal was unconditional cleared up doubts which had been raised by a Stagecoach statement to the London Stock Exchange.

The statement - delivered after Infratil announced the conditional deal - said there was "no certainty that the disposal will proceed".

But last night Infratil chairman David Newman said he was delighted to announce the sale was proceeding.

Infratil shares had remained on a trading halt all day.

Buying Stagecoach signals a move away from the traditional infrastructure investments of seaports, airports and energy companies that Infratil has specialised in.

Infratil will have to convince its traditional investors that a bus company fits within its stated brief of being a "specialist investor in infrastructure and utility assets".

While it is the dominant player in New Zealand commuter bus transport, Stagecoach is subject to competition from other bus companies, which submit tenders to the Auckland Regional Transport Authority (ARTA) to run buses on certain routes.

The bus companies keep all the ticket money, and get subsidies for running less profitable services.

Stagecoach received $48 million in ARTA subsidies last year.

Rail patronage is increasing steadily across Auckland, with large sums spent in the past few years on new rolling stock, stations and double-tracking portions of the western line.

A fare increase by bus companies last month has also given commuter rail a price advantage over buses.

After 10 years of rising patronage, bus passenger numbers have fallen over the past two years. However, there are indications that numbers may be rising again.

Stagecoach owns more than 900 buses in Auckland and Wellington, and employs 1800 people, including those who work on the Fullers fleet of seven ferries.

Stagecoach paid $111 million to buy its Auckland operation in 1998 from regional public ownership, and says a heavy investment in new buses means it has never returned a dividend to its British parent.

The deal is scheduled to be completed a week from today, on November 29.

Infratil's $1.2b of investments

* TrustPower $652m

* Wellington Airport $158.8m

* Glasgow Prestwick $168.6m

* Kent International $46.5m

* Port of Tauranga $31.6m

* Energy Developments Ltd $149.5m

* Other $28m

(Listed investments at market value. Others at book value.)