Stagecoach to sell off struggling US division for $271m after heavy losses

Stagecoach has agreed to sell its struggling US division to a private equity firm for $271m (£214m) to focus on its UK bus and rail operations.

The firm, which runs Megabus, has operated bus and coach services in North America for 20 years but the company reported a pre-tax loss of £22.6m in the six months to 27 October, led by an £84.5m writedown on its US business.

A potential sale was first mooted following the company’s results earlier this month when Stagecoach said it was “reviewing strategic options” for its US wing.

The transport operator said the sale to Variant Equity Advisors, would allow it to “refocus” on the company’s UK portfolio.

Proceeds will go towards reducing the company’s net debt and the deal could be completed by the end of April, Stagecoach said this morning.

Chief executive Martin Griffiths said: “During our two decades in the North American transportation market, our success included reinvigorating the inter-city coach sector and delivering growth in our innovative megabus.com brand.”

He added: “The sale of our North American operations will allow management to focus more closely on the significant opportunities for growth in the UK.”

“We have strong bus and rail operations in the UK where public transport has good prospects as the clear solution to the challenges of increasing road congestion and poor air quality."

Stagecoach’s US arm has around 4,500 employees and more then 2,000 buses and coaches and the management are expected to remain with the business after the sale.

The company's shares fell 1.4 per cent in early trading.