US investor I Squared to acquire London's red bus operator Arriva

20 October 2023 , 08:14

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The takeover is expected to be finalised next year. (Image: PA Media)

US infrastructure company I Squared is set to buy bus and train giant Arriva, the operator of London's iconic red buses. The deal, believed to be worth around £1.4 billion, comes after German owner Deutsche Bahn's lengthy efforts to sell the firm to reduce its debt.

Arriva, based in Sunderland, is one of the UK's largest train and bus operators, boasting the biggest fleet of London's famous red double-decker buses.

The company also operates the London Overground rail network and the Chiltern and CrossCountry rail franchises, employing about 34,000 people across 10 European countries.

The takeover is expected to be finalised next year, subject to "customary closing conditions and approvals". I Squared, which tried to buy London-listed rival transport firm FirstGroup last year, has pledged significant investment in Arriva following the deal.

Arriva Group chief executive Mike Cooper said: "This is a great opportunity for Arriva and the start of an important new chapter for our business."

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He added: "I know that the team at I Squared share our belief in providing sustainable transport services that cater for the needs of tomorrow, as well as the pressures of today."

Cooper concluded: "I Squared's investment in our business will help to unlock new opportunities and create value for everyone who is important to Arriva our people, the planet, and above all the passengers we are privileged to transport every day."

The Rail, Maritime and Transport (RMT) union has expressed outrage over the sale of Arriva to I Squared, a company they claim is registered in the Cayman Islands tax haven.

Mick Lynch, the General Secretary, stated: "This sale of Arriva by German state railway to a tax haven-registered company underscores what a perverse and corrupt system rail privatisation is in this country."

He added: "Our members have not had a pay rise in over three years despite huge profits and dividends generated for shareholders."

Finally, he warned: "And now we have the prospect of these ill-gotten gains ending up in a tax haven where there is even less scrutiny and even more wealth to be extracted from our railways."

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Steve Charnock