SCOTTISH transport tycoon Brian Souter will this week detail plans to return up to £250m to shareholders in Stagecoach — equivalent to nearly one-quarter of the company’s market value.
Souter and his sister Ann Gloag, who together own 26% of Stagecoach, are set for a £60m windfall from the scheme, which is expected to take the form of the issue of a new class of “B” share to existing shareholders.
Details of the share issue are expected on Wednesday, when Stagecoach unveils full-year results. Analysts forecast pre-tax profits of about £110m, and say the highlight is likely to be a better-than-expected contribution from South West Trains, London’s busiest commuter franchise.
Dixons, Britain’s largest electrical retailer, is expected to unveil a share buy-back the same day. Analysts believe the group has a cash pile of about £300m, which has been swelled by the £80m disposal of its share in Wanadoo, the internet service provider.
It is understood that the Stagecoach board opted for a share issue rather than a more traditional share buy-back scheme because it would allow shareholders to benefit without selling their existing shares.
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The issue will complete a remarkable renaissance for Souter and Stagecoach. The company — built by Souter from a one-bus operation in Scotland into a global transport group — fell out of favour in the City three years ago after an ill-advised American foray.
From a high of 280p in 1998, the company’s shares fell as low as 12½p in November 2002. They closed last week at 86p.
Souter, who had become chairman, returned as chief executive with the departure of Keith Cochrane two years ago.
He has since presided over the disposal of sections of the company’s overseas empire, in particular its problematic Coach USA operations.
The share-price collapse led to fevered speculation that Souter would take the company private, but he has repeatedly denied any such plans.
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Souter is expected to say that Stagecoach’s UK bus operations are showing steady growth. This year the company launched Megabus, a coach service that only takes bookings over the internet.
As well as South West Trains, Stagecoach owns a half share in Virgin Rail, which operates the West Coast and Cross-Country franchises, and is bidding in conjunction with Deutsche Bahn, the German national railway group, to take over the East Coast Main Line, which links London to Edinburgh.