Mobico Agrees Sale of West Midlands Bus Business to WMCA

Mobico Group has confirmed it has reached an agreement in principle to sell the net assets and operations of its West Midlands bus business, National Express West Midlands, to the West Midlands Combined Authority (WMCA). The deal is expected to bring Mobico upfront residual proceeds of around £24 million, once deductions for transferred liabilities are accounted for.

 

Tom Harrison (Bus Ambassador)

Deal structure

The headline asset value of the transaction is approximately £102 million. This covers primarily the UK Bus depots and diesel fleet, broadly in line with book value, plus £6.5 million of cash retained for operating purposes. Against this sits around £78 million in value deductions, chiefly for the transfer of the UK Bus pension liability and the electric vehicle contracts, along with additional recruitment and fuel hedging costs.

Mobico is also due a further £5.5 million in deferred consideration, split evenly between the end of 2027 and vacant possession of the Birmingham Central depot, expected at the end of 2029. On top of that, Mobico would receive £9.9 million in contingent consideration if WMCA reverses or halts its move to franchising before May 2028.

Ahead of completion, Mobico must carry out an internal reorganisation to transfer UK Bus's assets and operations into a new legal entity. Completion of the sale is targeted for around November 2026.

Why now

The sale comes as the West Midlands presses ahead with its shift from a deregulated bus market to franchising. The move was approved in May 2025, with full rollout due by the end of 2029. According to Mobico, that transition period had created significant uncertainty for the long-term future of its West Midlands operation. Rising costs and heavy reliance on local authority network funding had also left the business running at broadly break-even profitability for several years.

The West Midlands is not alone in taking this route. Greater Manchester completed its own move to franchised buses under the Bee Network, while Liverpool City Region named its first franchise operators earlier this year. West Yorkshire is also pursuing franchising as part of a wider shift among English city regions towards public control of bus networks, following powers granted under the Bus Services Act.

Speaking about the deal, Executive Chair Phil White said,

"This agreement is another significant milestone in making Mobico simpler and stronger while substantially de-risking the Group. UK Bus has been break-even for a number of years and the uncertainty of future franchising in the area presented a significant headwind for the Group in managing the cost base and liabilities of the business going forward.

As the West Midlands moves toward a franchised network, WMCA is the logical buyer to facilitate that transition. The transaction represents fair value for the assets and liabilities of UK Bus while providing certainty for our colleagues upon completion."

The business today

Mobico has run the majority of urban bus services in and around the West Midlands for around 40 years. In that time the fleet has been substantially modernised, including the introduction of electric vehicles. The operation currently runs approximately 1,400 buses, carries around 120 million passenger journeys a year and covers an annual service mileage of roughly 54 million miles.

Financial context

For the 15 months to 31st March 2026, UK Bus generated revenue of £338 million, adjusted EBITDA of £23 million and adjusted operating profit of £2 million. Strip out profit from asset disposals, including two depots sold to WMCA in late 2025, and the business was marginally loss-making over the period. Net assets stood at approximately £31 million as at 31 March 2026, with the pension scheme carrying an IAS19 net deficit of £53 million.

Mobico says the transaction is expected to be broadly neutral to earnings and to 2026 covenant gearing going forward. The Group will retain a net liability of approximately £5 million for historical insurance claims.