Mobico Group (LSE:MCG) has reached an agreement in principle to sell the net assets and operations of its West Midlands bus business to the West Midlands Combined Authority (WMCA) for expected upfront residual proceeds of approximately £24 million.
The transaction values the depots and diesel fleet at approximately £102 million, broadly in line with book value, plus £6.5 million of retained cash.
That headline figure is reduced by around £78 million of deductions, chiefly the transfer of the UK Bus pension liability and electric vehicle contracts, alongside recruitment and fuel hedging costs.
Mobico will also receive £5.5 million in deferred consideration, split equally between the end of 2027 and vacant possession of the Birmingham Central depot expected at the end of 2029.
The business runs approximately 1,400 buses and around 120 million passenger journeys annually, and has operated urban bus services in and around the West Midlands for around 40 years.
The West Midlands approved a shift from deregulated bus services to a franchising model in May 2025, with full rollout by the end of 2029, a change that had clouded the unit's long-term prospects.
For the 15 months to 31 March, UK Bus generated revenue of £338 million but was marginally loss-making once profit on asset disposals is excluded.
"UK Bus has been break-even for a number of years and the uncertainty of future franchising in the area presented a significant headwind for the Group", said Phil White, Mobico's executive chair.
The deal requires an internal reorganisation to transfer UK Bus into a new legal entity before completion, expected around November 2026.
Panmure Liberum analyst Gerald Khoo, in a noted, described it as "a modest, somewhat value-accretive step toward rehabilitating Mobico after transferred liabilities".
Repeating a Hold rating, the analyst lifted the Mobico price target to 30p from 25p.
News Intelligence what this means for the company
Mobico is exiting its West Midlands bus operations via a £24m upfront sale to the regional authority, eliminating exposure to an uncertain franchising transition due by end-2029. The business was marginally loss-making on an operating basis and had clouded long-term prospects; the deal crystallizes a modest cash return while shedding a break-even drag and regulatory risk, but the transaction is not material to group cash generation—the £24m upfront proceeds represent less than 3% of the group's adjusted operating profit guidance for 2026.
The sale removes a structural headwind (franchising uncertainty) and a break-even unit from the portfolio, but does not materially alter Mobico's earnings or cash profile. The group's momentum remains anchored to Spanish (Alsa) and German rail operations; this UK divestment is a tidying move, not a strategic pivot.
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