Rotalawww.rotalaplc.com TICKER: ROL EXCHANGE: L
Rotala is a 'buy and build' player in the bus business. Its main strategy has been to focus on buying small and medium sized route operators, along with their contracts, bus fleets and routes, in and around Birmingham, Bristol and in the Birmingham-Bristol corridor. It also operates a number of private routes for large corporate clients, typically providing transport for staff members or customers. Growth has primarily been through acquisitions, mainly of small local route operators. The aim has been to build up critical mass of buses, depots, routes, and contracts. A crucial part of this process is the acquisition or development of depots that can act as a hub for a number of different bus operations and collections of routes. Depots also provide maintenance workshops and parking, with the economics such that costs can be recovered much more efficiently, and profits maximised, when depots are fully utilised. Operating out of an efficient centrally located depot can transform the economics and profitability of a business that might have been struggling to manage independently. The company has also been working with bus suppliers to develop more fuel-efficient vehicles.
Focus on Birmingham-Bristol corridor
Future legislative changes could further improve prospects
Predictable cash flow and margins
Recent placing reduces gearing and interest costs
Conservative DCF model suggests present value of 73p / share
Foreign buyers gorging on UK stocks
Document can be downloaded here: UK plc ‘going for a song’
Being a shareholder in a company that receives a juicy takeover offer is a marvellous feeling. Something that many fortunate investors have experienced over the past 3 years. Thanks to a spate of M&A bids by deep pocketed overseas buyers – partly triggered by the June 2016 Brexit result, which sent the £ tumbling and adversely affected the FTSE.
Consequently today, given this trend is unlikely to end anytime soon, we’ve highlighted 30 possible acquisition ideas in the attached research paper. Spilt equally between large and smallcap stocks – covering a broad selection of industries.
What’s more we believe most of these businesses are underpinned by strong fundamentals and substantial upside in the event of predatory interest.
According to Factset Mergerstat/BVR, the average bid premium paid for such deals between 2004-14 was 30% – with the figure trending upwards since the global financial crisis.
Happy investing. Published 27th August 2019