Mobico Group Plc (NXPGF,MCG.L), a British public transport company, on Friday announced that it has agreed to sell its North America School Bus business to infrastructure investment manager I Squared Capital for up to $608 million or around 457 million pounds.
Further, the company said it expects to meet its full-year 2024 adjusted operating profit guidance, although at the lower end, with School Bus contributing around 9 million pounds to that total.
Mobico is currently trading 8.74% lesser at 53.80 pence on the London Stock Exchange.
The company said the net proceeds from the deal will be retained to reduce net debt.
The sale of the School Bus business is expected to generate upfront net proceeds of around $365 million to $385 million or 275 million pounds to 290 million pounds, and reduce reported net debt further by removing $38 million in lease liabilities.
The deal also includes a potential earn-out of up to $70 million based on future performance.
The deal is expected to close in the early third quarter.
Under the agreement, the enterprise value of $608 million represents around 50 times of the School Bus business' expected adjusted operating profit of $11.5 million for fiscal year 2024, and about 5 times its expected adjusted EBITDA of $122 million.
The sale is expected to strengthen the balance sheet, reallocate capital from this asset-heavy division, helping to reduce debt and fund growth opportunities, particularly in ALSA.
Mobico is scheduled to publish its full year results on April 29.
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