RNS Number : 3102T
Stagecoach Group PLC
12 December 2012
12 December 2012
Stagecoach Group plc
Twin America joint venture
Stagecoach Group plc ("Stagecoach") is disappointed that the United States Department of Justice ("DoJ") and the Attorney General of the State of New York ("NYAG") have initiated legal proceedings against Twin America, LLC; Coach USA, Inc; International Bus Services, Inc; CitySights LLC; and City Sights Twin, LLC, alleging that the formation of the Twin America, LLC ("Twin America") joint venture in 2009 was anticompetitive. We fundamentally disagree with their allegations and their assessment of the joint venture.
Twin America is a joint venture between Stagecoach North America and City Sights, which began operating on 31 March 2009. It principally operates sightseeing bus services in New York City. Each of the joint venture partners contributed certain assets and rights to the joint venture. Stagecoach North America holds 50% of the voting rights and 60% of the economic rights of the joint venture.
New York has a vibrant and highly competitive tourist attraction market. Moreover, since the joint venture was formed in 2009, the sightseeing bus industry has become even more competitive as new sightseeing bus operators have commenced business in New York and other companies have announced firm plans to do so shortly. Stagecoach North America, City Sights and Twin America disagree with the position of the DoJ and the NYAG and believe their action is unnecessary.
Despite the challenging macroeconomic conditions over the past three and a half years, the joint venture has delivered a range of improvements and greater value to customers. It has invested in the development of new tours as well as continuing to offer flexible, value for money tickets. Contrary to the suggestion by the DoJ and NYAG, price increases in 2009 reflected increased labour, fuel and other costs. Notwithstanding continued increases in such costs, the efficiencies achieved by the joint venture have enabled Twin America to respond with better value and service to its customers.
Twin America and the joint venture parties have continued to work with the regulatory authorities with a view to reaching a resolution to the process in the interests of all parties. However, we do not believe all opportunities for a mutually satisfactory resolution have been fully exhausted. As a result, we are disappointed at the view taken by the authorities.
We believe our proactive and constructive approach could have resulted in a proportionate and workable solution. It would have ensured the DoJ achieved its regulatory objectives and would also have supported continued healthy competition among New York sightseeing businesses.
However, in view of the announcement by the DoJ and NYAG, the outcome is uncertain. The DoJ and the NYAG are seeking dissolution of the joint venture or, alternatively, divestiture of assets approximating the City Sights business that existed prior to the formation of the venture, including the City Sights brand, as well as an injunction against re-combining, equitable monetary relief, fees, costs and other relief as the court might order.
Nevertheless, Twin America and the joint venture parties intend to robustly defend their position and will take all actions to protect their interests. Stagecoach will continue to keep the market updated as appropriate.
Investors and analysts
Martin Griffiths, Finance Director 01738 442111
Ross Paterson, Director of Finance & Company Secretary 01738 442111
Steven Stewart, Director of Corporate Communications 07764 774680
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