Souter’s Alexander buses sold to Canadians for £320m

UPDATE 2 — Souter Investments, the family investment office of Stagecoach Group founder Brian Souter, announced that its Falkirk-based global bus manufacturer Alexander Dennis (ADL) has been sold to Toronto Stock Exchange listed bus manufacturing giant NFI Group Inc.

NFI Group said the transaction value was £320 million “on a cash-free, debt-free basis, subject to certain adjustments.”

Souter Investments will retain an equity interest in NFI and Alexander Dennis going forward, having been issued shares in NFI Group as part of the transaction.

NFI said: “The transaction was funded through NFI’s existing credit facility, a new US$300 million credit facility and the issuance from treasury, of 1.47 million common shares of NFI, in lieu of cash, to ADL’s primary shareholders, including ADL’s CEO and CFO …

“NFI has entered into an agreement with Colin Robertson, ADL’s chief executive officer, and Michael Stewart, ADL’s chief financial officer, to continue leading ADL.

“They will also be tasked with leading NFI’s international growth ambitions.

“ADL’s primary shareholders along with Messrs. Robertson and Stewart have elected to roll approximately 10% of their transaction consideration into NFI shares ensuring strong ongoing alignment with NFI’s existing shareholders.”

Alexander Dennis generated annual consolidated revenue of £631 million in 2018 from delivering 2,533 buses for manufacturing revenue of £559 million and £71 million revenue in aftermarket parts and service.

Alexander Dennis is one of the world’s leading independent bus and coach manufacturers and the number one global producer of double deck buses.

With a long history spanning more than a century, Alexander Dennis has over 31,000 vehicles in service in the UK, Europe, Hong Kong, Singapore, New Zealand, Mexico, Canada and the United States sold under the Alexander Dennis and Plaxton brands.

ADL was established in 2004 when a consortium of Scottish entrepreneurs led by Brian Souter and including Ann Gloag, Angus Grossart and David Murray acquired the business from TransBus International’s administrators.

Alexander Dennis CEO Colin Robertson, who has driven the growth and internationalisation of the company over more than 10 years, and chief financial officer Michael Stewart, will continue to lead ADL as well as head up NFI’s international growth ambitions.

“We are incredibly proud of the growth and success we’ve had building Alexander Dennis over the past 15 years, and I’m excited to have the ADL team join NFI – one great bus company joining another,” said Robertson. 

“We believe our consolidated businesses will enhance NFI’s market leading position in North America, while improving NFI’s offering through combined engineering expertise, supplier partnerships, electric vehicle know-how and aftermarket platforms.”

Brian Souter, chairman of Souter Investments, said: “Colin, Michael and their team at ADL have built a fantastic market leading business.

“Having been involved with ADL since 2004, I have witnessed the transformation of the company into a truly international business with an exceptional product portfolio, a reputation for innovation and design and engineering excellence, and a first-class approach to customer service.”

John Berthinussen, investment director at Souter Investments, said: “The sale of ADL continues an extremely active period at Souter Investments where we have made several new investments, supported our businesses with follow-on capital, and completed a number of successful sales. 

“Our primary focus remains on private equity investing, where we are not constrained by fund rules or specific investment hold periods and can offer flexible and supportive institutional capital, tailored to the specific business and situation we are investing in.”

Souter Investments said Lazard acted as financial advisors for “certain” ADL shareholders, Deloitte and Roland Berger provided vendor due diligence services, and CMS, Dickson Minto and Pinsent Masons acted as legal advisors.

“This is a transformational acquisition for NFI to become a global bus manufacturer,” said NFI CEO Paul Soubry.

“ADL is the UK’s number one bus manufacturer and the number one global producer of double deck buses, with an established international presence and is recognized as a leader known for innovative products and a commitment to quality and service.  

“We’re thrilled to have ADL join the NFI family in a transaction that we believe will drive our business forward by combining joint strengths in engineering, sales, new product development and manufacturing with NFI’s expertise in operational excellence, insourcing, fabrication and systems management.”

NFI chairman Brian Tobin said: “ADL is a company we know very well, and this acquisition presents a compelling opportunity to make NFI a more diversified and robust business while creating immediate value for our shareholders.

“NFI’s management team has a track record of delivering accretive acquisitions and prudent capital management which we expect to continue through the addition of ADL.”