Ann: Trading Halt, page-3

Street Talk

Street Talk:

Australian ferry and bus operator Kelsian Group is set to enter the United States market via the acquisition of coaches and charter bus business All Aboard America! Holdings.

It is understood Kelsian was homing in on a deal to acquire All Aboard on Tuesday, finalising negotiations with owner Tensile Capital Partners and associated funding.

The acquisition is expected to value All Aboard at about $500 million on an enterprise value basis.

Kelsian Group boss Clint Feuerherdt’s trying to get an M&A and associated equity raising over the line on Tuesday. Roy Vandervegt

All Aboard is the fourth-largest bus group in the United States, with more than 500 buses on the road. The group has buses under six brands; its flagship label, All Aboard America!, runs charter, scheduled, transit and contract services in Arizona, New Mexico and Texas.

All Aboard has been owned by Tensile Capital, a hedge fund, since 2016. It was formerly owned by private equity firm Celerity Partners.

It’s a big acquisition for Kelsian, which made 86 per cent of its revenue in Australia in the six months to December 31, carrying passengers on its local ferries and buses, and another big step down into buses which has been its primary area of focus in recent years including via the acquisition of Transit Systems Group.

The group has also been eyeing international expansion, notably bidding for UK-based bus contractor Go-Ahead last year before it was sold to rival Australian bus business Kinetic.

The company flagged M&A plans with investors at its recent half-year results, saying it was focused on “strategic acquisition opportunities in UK/Europe/USA and bolt on acquisitions in Australia”.

The US represents fresh territory for Kelsian.

The company’s expected to seek to raise $300 million equity to help bankroll the move, should it come together as expected on Tuesday. While the deal was yet to be finalised, the raising was expected to be split between a placement of new shares and rights issue, each worth about $150 million.

Macquarie Capital is in Kelsian’s camp, while Gresham’s also understood to be involved.

Street Talk revealed Kelsian’s plans for an acquisition and equity raising on Monday night. The company’s shares went into a trading halt on Tuesday morning ahead of a material announcement regarding a potential acquisition.