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Scottish Firm Stagecoach Makes An Exit From US

Perth based transport firm Stagecoach which has been operating bus services across United States for two decades has announced that it is moving its business out of the country after selling its division to a private equity firm for $271 million. Stagecoach has announced that after this sale it will concentrate on its operations of bus and rail services in UK as the US based operations was running at a loss and it had to write down the value of its operations. The firm reported pre-tax loss of £22.6 million in UK due to its write-down of £ 85.4 million on the US division.

Though the firm reported loss its shares were up by 6 percent as the group’s UK operations were performing amazingly well. After the announcement of its US division’s sale, Stagecoach’s CEO Martin Griffiths stated that in the two decades of its operations in US its success was driven due to reinvigorating the inter-city coach sector and growing with its megabus.com brand. After sale of its North American operations its management can now focus on growth opportunities in UK in both road and railroad sectors. The firm’s North American operations were hit hard by rising competition and also fuel and employee costs. In recent years its US division’s revenue fell by 3 %t with megabus.com reporting 1.7 % decline in profits.

According to transport analyst Gerald Khoo, the sale of Stagecoach’s US division was sensible but the sale price was disappointing. But growing the megabus.com dream was not possible as recent reduction in fuel charges made airlines and car travel more competitive so growing the brand was a challenge as the only way to survive was by growing exponentially. Under these circumstances the firm decided to move out of United States and concentrated on their core business based in UK. He agreed that though the valuation was less than expected they did not have a choice.

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