Variant Buys Coach USA and Coach Canada

Variant Equity has closed its acquisition of Coach USA and Coach Canada (together Coach USA) from Stagecoach Group plc for $271 million.

Coach USA is a provider of transportation services including scheduled intercity bus service, local and commuter bus transit, city sightseeing, tour, yellow school bus, and charter bus service. The company operates through several brands, including megabus.com, which provides intercity coach services. Coach USA has more than 4,500 employees and 2,200 buses and is headquartered in Paramus, NJ (www.coachusa.com).

Coach USA’s operations consist primarily of scheduled services in the New York metropolitan area and the Chicago metropolitan area, with several charter operations near Pittsburgh and scheduled operations in southern New York and southern Wisconsin, along with its Megabus operations throughout the eastern and central United States.  Coach Canada, also included in this transaction, has operations in the provinces of Quebec and Ontario.

Revenues for Coach USA were $323 million for the six months ending in October 2019 with similar period operating profits of $21 million.

“With a history that dates back to 1922, Coach USA has been a consistent leader in the passenger transportation industry,” said Farhaad Wadia, managing partner of Variant. “The combination of Coach USA’s unwavering commitment to providing safe and reliable transportation and Variant’s focus on providing corporate carve-outs with the technological, operational and financial resources required to accelerate innovation and growth, will allow the company and its management team to unlock their full potential.”

Stagecoach acquired Coach USA in 1999 for $1.9 billion. Due to reduced operating results – the company’s profitability was greatly affected by the September 11, 2001 terror attacks – Stagecoach sold off parts of its New England business to Peter Pan Bus Lines in 2002; sold its South Central and West operations to Coach America, a platformed formed by Kohlberg & Co., in 2003; and sold its Southeastern operations to American Coach Lines, a platformed formed by Lincolnshire Management, in 2003. In May 2006, Coach America purchased American Coach Lines from Lincolnshire and in November 2006 Kohlberg sold Coach America to Fenway Partners. Stagecoach reacquired some of these businesses in 2012 when Coach America filed for bankruptcy.

Variant Equity makes control investments in corporate divestitures and corporate carve-out transactions, private equity-owned assets, and privately-held companies facing succession or transition issues. The firm is industry agnostic but has specific interest in transportation and logistics, technology, and business services. Typical acquisitions will have revenues of at least $75 million. Variant was founded in 2017 by Farhaad Wadia and is headquartered in Los Angeles (www.variantequity.com).

The buy of Coach USA is Variant’s third corporate carve-out in the last 18 months. In September 2018 it acquired Tampa, FL-based the Certegy check services business, a provider of payment risk management services to retailers and financial institutions, from Fidelity National Information Services (NYSE: FIS); and in December 2017 it acquired Long Island City, NY-based Curb Mobility, a provider of billing, ride sharing and advertising technology to the taxi and other for-hire ride operators, from VeriFone Systems (NYSE: PAY).

“We have remained committed to the corporate carve-out market and continue to show a high level of activity in the space,” added Mr. Wadia. “We believe our focus and experience has made us the preferred acquirer to our transaction partners and management teams.”

Under Variant ownership, Coach USA will be led by CEO Linda Burtwistle, who previously served as the company’s president and chief operating officer. “We are proud of what we have been able to accomplish under Stagecoach’s ownership and are looking forward to building upon those successes in the future,” said Ms. Burtwistle. “We are extremely excited to partner with Variant. Their transportation and logistics experience, combined with their focus on driving technology into businesses will allow us to accelerate our vision for the company as the market leader in sustainable, technology-enabled, value-priced transportation across the United States and Canada.”

Wells Fargo Bank and MUFG Union Bank were joint lead arrangers for the financing of this transaction.

RBC Capital Markets was the financial advisor to Stagecoach Group.

© 2019 Private Equity Professional | April 17, 2019

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