SeaLink catches the bus

Ferry operator in deal for Transit Systems Group

FERRY and cruise ship operator SeaLink is tapping shareholders to help it fund a deal for private bus firm Transit Systems Group that could be worth up to $700 million.

SeaLink announced yesterday it had entered into binding agreements to acquire Australia’s largest private operator of metropolitan public bus services for an enterprise value of $635 million, plus an earn-out component of up to $63 million.

News of the deal comes about 18 months after the Captain Cook Cruises operator itself rejected a $482 million takeover bid from an unnamed party. The buyout of Transit also involves a management shuffle, with Transit Systems chief executive Clint Feuerherdt (pictured) to replace SeaLink’s departing chief executive Jeff Ellison.

Transit shareholders will own a 33.4 per cent stake in SeaLink following the merger.

“Over a long period of time, both SeaLink and Transit Systems Group have developed market-leading positions in their respective sectors and I see significant opportunity for the combined group to target integrated multi-modal passenger transport contracts across the public and private sectors,” Mr Feuerherdt said.

SeaLink has a strong hold on the tourism and passenger ferry market at a number of popular Australian locations, including Kangaroo Island, Rottnest Island, Moreton Island, Tiwi Islands and Bruny Island.

It also owns the Kingfisher Bay Resort on Fraser Island, operates cruises in Sydney Harbour and on the Murray River, and runs passenger services in Townsville, Darwin and Perth.

Transit, meanwhile, operates about 3129 buses and 32 depots across Australia, London and Singapore on behalf of local and regional governments and authorities, with 16 major contracts in Australia, 23 in London and 31 routes under contract in Singapore.

SeaLink said the deal would result in between $4 million and $4.6 million worth of synergies per year, while also leveraging combined expertise, client relationships and geographical presence.

“This acquisition diversifies SeaLink’s end-markets towards long-term bus contracts with government counterparties who are looking for reliable public transport solutions to support growing populations,” SeaLink boss Jeff Ellison said.

To partly fund the acquisition, SeaLink is raising a total of $154 million through dual placement and entitlement offers.