Arriva merger talks hit buffers

British transport firm Arriva today said talks with France’s national rail operator about creating a new European industry giant had come to nothing.

British transport firm Arriva today said talks with France’s national rail operator about creating a new European industry giant had come to nothing.

Arriva said in late January that it was in the early stage of talks over a potential tie-up with “all or part” of Keolis, which is 44.5% owned by SNCF. Keolis – which has the largest bus and coach fleet in France – employs 40,000 staff with operations in Europe, Algeria, Australia and Canada.

In the UK it is a minority shareholder in the Govia joint venture with Go-Ahead, which operates the Southern, Southeastern and London Midland franchises.

Arriva shares dropped by 3% today after it said no agreement could be reached with SNCF and that all discussions have now ceased.

The intention of the talks had been to capitalise on the “increasing liberalisation” of the European transport market.

It would have created an operation with revenues of almost £6 billion – and thrown down the gauntlet to the UK’s current biggest transport firm, FirstGroup.

In France, Keolis operates 80 urban bus networks – including a fleet of 5,000 buses and more than 15,000 employees – as well as nearly 200km of light rail such as metro and tram services.

The tie-up would have been a good fit for Arriva’s mainland European division, which reported £1.6 billion in revenues for 2009, but lacks a significant presence in France to match its operations in other major European countries.

Arriva lifted group revenues to £3.15 billion last year, but overall profits fell 19% to £121.7 million due to a higher fuel bill at its bus division and the impact of recession on its CrossCountry rail business.

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