Kelsian Group (ASX: KLS) has today announced it will acquire the business assets of Perth bus and charter service provider Horizons West Bus and Coachlines for an enterprise value of $23.4 million.
The Adelaide-based company, formerly known as SeaLink, will take ownership of Horizons West’s 138 buses that operate from two depots in Perth and provide services to more than 400 schools, a university, and the government of Western Australia.
Kelsian could pay up to $30 million for Horizons West should a deferred consideration and earn-out component of up to $7 million come into play.
Founded in 1985, Horizons West is one of Perth’s oldest family-owned and operated bus and coach companies, which generated $15.9 million in revenue and normalised earnings before tax in FY22.
The company is a market leader and is ‘well recognised in the Perth metropolitan area’ according to Kelsian, which hopes the new subsidiary will complement the ASX-listed company’s position in the public transport and resources sector bus markets in WA.
Following the acquisition, Kelsian will operate a portfolio of 1,367 buses and employ 1,982 people in Western Australia, building on its existing presence through brands including Swan Transit and Go West Tours.
This contributes to Kelsian's already substantial transport network which, as of 30 June, was made up of 4,143 buses, 115 vessels and 24 light rail vehicles that delivered more than 240 million customer journeys in FY22.
“Kelsian’s intention is to continue to work with and focus on maintaining existing levels of service for Horizons West clients, as well as welcoming employees of Horizons West into the Kelsian Group,” Kelsian said.
The acquisition, facilitated through Kelsian’s wholly owned subsidiaries WA Bus and Coachlines and STG Properties, will be funded from existing cash reserves and is expected to complete in late 2022/early 2023.
It follows a year of transformation for Kelsian, which changed its name from SeaLink in November last year to better reflect its diverse transport offering, driven largely by the company's 2020 acquisition of Transit Systems Group - Australia's largest private operator of public bus networks at the time with established operations in London and Singapore to boot.
That purchase saw Adelaide-headquartered Kelsian, which was originally known for its ferry services to SA's Kangaroo Island, grow its employee numbers from 1,655 in 2019 to around 9,000 currently.
The company now has a more holistic approach to transport, and offers ferry, bus and light rail services nationally and in Singapore and London. This focus on contracted metropolitan and regional bus services meant Kelsian maintained strong revenue during COVID-19 affected periods according to the company's chair Jeffrey Ellison.
Kelsian is also the first operator to introduce hydrogen buses in Australia, leveraging its experience of operating those vehicles in the UK, and is aiming to lead the transition to zero-emission transport in Australia. The company is also a leader in the operation of electric buses, with 57 in its fleet and another 50 on order.
"A global focus on decarbonisation is setting the scene for record levels of investment in public transport," said Kelsian CEO Clinton Feuerherdt in the company's FY22 annual report.
Shares in Kelsian are down 0.86 per cent to $4.59 per share at 10.55am AEDT.
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