By: Fabian Cotter, Photography by: courtesy ADL + MCI/NFI Group

NORTH AMERICA’s largest and most diversified bus and coach manufacturer - NFI Group Inc., ("NFI") – has acquired major UK bus-building enterprise Alexander Dennis Limited ("ADL") for a total transaction value of £320 million on a cash-free, debt-free basis, subject to certain adjustments, it’s announced recently.

(L-R) Paul Soubry, NFI president and CEO, and Colin Robertson, ADL chief executive.

In 2018, ADL generated annual consolidated revenue of £631 million (US$843 million), from delivering 2,533 buses for manufacturing revenue of £559 million (US$747 million) and £71 million (US$95 million) in aftermarket parts and service revenue, it’s claimed.

During 2018, approximately 49 per cent of ADL’s consolidated revenue was generated from the UK, 27 per cent from Asia Pacific markets, 12 per cent from North America with the remaining 12 per cent coming from aftermarket and developing markets. In addition, ADL generated free cashflow of £18 million (US$24 million), the company states. From 2010 to 2018, ADL achieved a compound annual revenue growth rate of 10.5 per cent.

"This is a transformational acquisition for NFI to become a global bus manufacturer," said Paul Soubry, NFI's president and CEO.



"ADL is the UK’s number one bus manufacturer and the number one global producer of double-deck buses, with an established international presence and is recognised as a leader known for innovative products and a commitment to quality and service. We’re thrilled to have ADL join the NFI family in a transaction that we believe will drive our business forward by combining joint strengths in engineering, sales, new product development and manufacturing with NFI’s expertise in operational excellence, insourcing, fabrication and systems management," he said.

NFI Board chairman, the Honourable Brian Tobin, P.C. O.C. added: "ADL is a company we know very well, and this acquisition presents a compelling opportunity to make NFI a more diversified and robust business while creating immediate value for our shareholders. NFI’s management team has a track record of delivering accretive acquisitions and prudent capital management which we expect to continue through the addition of ADL."

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NFI has entered into an agreement with Colin Robertson, ADL’s CEO, and Michael Stewart, ADL’s CFO, to continue leading ADL. They will also be tasked with leading NFI’s international growth ambitions. ADL’s primary shareholders along with Messrs. Robertson and Stewart have elected to roll approximately 10 per cent of their transaction consideration into NFI shares ensuring strong ongoing alignment with NFI’s existing shareholders, NFI states.

"We are incredibly proud of the growth and success we’ve had building Alexander Dennis over the past 15 years, and I’m excited to have the ADL team join NFI – one great bus company joining another," said Robertson.

"We believe our consolidated businesses will enhance NFI’s market leading position in North America, while improving NFI’s offering through combined engineering expertise, supplier partnerships, electric vehicle know-how and aftermarket platforms.

"I look forward to continuing our solid progress at ADL and also championing further international growth for NFI in coordination with Paul and his leadership team," he explained.



According to NFI, the transaction presents a number of attractive opportunities, including:

1. Market leadership, international diversification and a growth platform for NFI: ADL is said to be the number one global producer of double-deck buses with an established presence across multiple continents, over 50 per cent market share in the UK, and a growing presence in continental Europe, Asia Pacific and North America. ADL’s recent contract win in Berlin, Germany, provides a platform for further European expansion while its existing presence in Mexico establishes a model for further Latin American growth. 

2. Enhanced product portfolio: ADL adds to NFI’s product portfolio through its class-leading, internationally proven line-up of single and double-deck buses, and motor coaches. ADL enhances NFI’s technical competencies on lightweight chassis and bodies. NFI’s electric vehicle ("EV") experience will enhance ADL’s international EV offering and ensure both companies drive the future of clean transportation. The combined NFI and ADL business creates the strongest customer offering in North America with the widest range of buses and unrivalled aftermarket support. 

3. Cost-effective platform: ADL’s flexible operating model enables the business to enhance competitiveness in existing markets while entering new regions. ADL successfully operates in highly competitive markets through its ability to effectively and efficiently develop innovative new products, leverage local sourcing, create flexible assembly partnerships and establish dedicated aftermarket service. 


4. Financially compelling: The transaction is expected to be immediately accretive (before potential synergies) to both earnings per share and free cashflow per share. NFI expects the combined financial results will enable [us] to de-lever quickly and return to our target of 2.0x to 2.5x total debt to EBITDA within approximately 18 months of closing without impact on the company’s dividend policy. NFI expects to capture synergies over time and to capitalise on further growth opportunities through a combined approach. The combined NFI and ADL business will explore North American manufacturing, sales, service, and supply chain optimisation, as well as part fabrication opportunities that may provide additional benefits over time. 

5. Strong cultural fit with commitment to safety and the environment: Through NFI’s longstanding dialogue and prior joint venture with ADL it became clear the two companies shared similar cultures and values regarding quality and customer experience. Further, there is a clear alignment with management strategy, market outlook, and EV adoption expectations, which should allow for a smooth transition. ADL’s management team remains in place to drive performance and international growth.

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The transaction, including related expenses, is being funded through NFI’s existing credit facility capacity, a new US$300 million credit facility with substantially the same terms as the existing credit facility, and the issuance, from treasury, of 1.47 million NFI common shares, in lieu of cash, to certain primary ADL shareholders, representing approximately 2 per cent of NFI’s outstanding shares following completion of the transaction. At close of the transaction, NFI drew an aggregate of approximately US$420 million on its credit facilities, resulting in pro forma total debt to pro forma Adjusted EBITDA as of December 30, 2018 of approximately 2.9x, the company explains.

BMO Capital Markets and HSBC Securities (Canada) Inc. acted as financial advisors and Torys LLP and Eversheds Sutherland (International) LLP acted as legal counsel to NFI in connection with the transaction. BMO Capital Markets and HSBC Bank Canada acted as co-lead arrangers and joint-bookrunners on the new credit facility.

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NFI provides market leading transportation solutions under the brands: New Flyer®, MCI®, ARBOC® and NFI Parts™, it states. Tracing its roots back to 1930, NFI has more than 74,000 vehicles in service in Canada and the United States. 


Alexander Dennis Limited, ("ADL") is one of the world's leading independent bus and coach manufacturers and the number one global producer of double-deck buses, it states. With a history spanning more than a century, ADL has in excess of 31,000 vehicles in service in the UK, Europe, Hong Kong, Singapore, New Zealand, Mexico, Canada and the United States sold under the Alexander Dennis and Plaxton brands.

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