Big Bus tours bidders' interest ahead of September launch of sale process

Coffee chats are now being held to pique interest for the leisure group from potential bidders, two of the sources said.

The sale process for the operator of open-top sightseeing bus tours is reportedly being run by Bank of America. A deal could be valued at around GBP 600m, the same May media report said without explaining what that number is based on.

One of the sources said the sponsor is looking to market the business off around USD 60m of EBITDA, based on a 2023 calendar year run rate. Big Bus has a fiscal year that runs from May to April.

Turnover for the year ending April 2022 stood at USD 99.5m and adjusted EBITDA at USD 11.2m with the COVID-19 pandemic having impacted both that financial year and the previous one, according to the company's latest Companies House filing. Prior to the health crisis, in FY19, the group turned over USD 269m and reported a gross profit of USD 106m, as per a separate filing.

The upcoming sale will mark a relaunch of a 2019 process, when Exponent sought to sell Big Bus Tours alongside another of its portfolio companies – The Leisure Pass Group (which has since been renamed Go City), as reported at the time. That process, which attracted interest from several large private equity firms, quietened down with the onset of the COVID-19 pandemic, one source said. This time round, Big Bus Tours is expected to be sold on a stand-alone basis, the source added.

Since the relaunch of the sale became public in May, some buyside bankers have begun pitching the business, according to the sources. However, interest has been tempered amid questions about the sustainability of Big Bus's financials, as well as the risk that Merlin, the entertainment group that owns a minority stake, could make a takeover bid, one source said.

Other questions being asked include the capex-heavy nature of the business, given the needed maintenance and upgrades of its bus fleet, two sources said. In 2017, the company launched its first open-top zero-emission electric bus in Paris and said it would monitor the operation of the new bus and use the findings to produce its future purchasing strategy.

Big Bus Tours is the "largest operator" of hop-on hop-off sightseeing bus tours globally, with operations in 25 cities and a fleet of hundreds of buses carrying more than 4 million tourists per year, according to its website. Its largest markets are London, New York and Paris.

Big Bus Tours has a Likely to Exit (LTE) score of 66 out of 100, according to sister publication Mergermarket's predictive LTE algorithm, which tracks the likelihood of sponsors to exit a portfolio company. The days since the company was last rumoured for a sale and the length it has been in Exponent's portfolio are some of the leading indicators to this score.

Exponent and Bank of America declined to comment. Big Bus Tours and Merlin did not respond to requests for comments.

*Mergermarket's LTE predictive analytics assign a score to sponsor-backed companies to help track and predict when an exit could occur through M&A, an IPO, a direct listing or a deSPAC transaction.

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• Topics
• Consumer
• Exits
• UK / Ireland
• Exponent Private Equity
• Mergermarket