German bid for Arriva in closing stages

The takeover of one of Britain's largest public transport groups by Deutsche Bahn could be agreed by the end of the month, according to reports this weekend. Analysts say that the £1.6bn deal to buy Arriva, if completed, is likely to be the first of many similar deals across Europe as legislation opens up the market to competition. Due diligence is understood to be well advanced and the board of the German state-owned firm will meet this week to approve a formal bid for Arriva. Arriva declined to comment today. The Sunderland-based group operates most of London's red buses, as well as most rail services in Wales and the CrossCountry rail franchise. It also operates services in 11 other countries in Europe. Deutsche Bahn, which made an approach for Arriva last month , is thought to be in exclusive talks with the company. French group SNCF had been interested in mounting a rival bid but has dropped out after failing to secure support from the French government, it was reported. If the deal is completed, Arriva would become the first large British transport group to be taken over. National Express came closest to a change of control last year after Spain's Cosmen family, which owns almost 20% of the group, teamed up with private equity outfit CVC but decided not to go ahead with a bid. Europe's largest transport groups are jockeying for position as they seek scale to take advantage of both the liberalisation of the market over the next decade and cash-strapped local authorities looking to attract private investment into their bus and rail networks. Deutsche Bahn, which has been earmarked for partial privatisation, has already made inroads into Britain, acquiring Laing Rail, the owner of Chiltern Railways and operator of services between London and Birmingham.