Most companies claim that they are led by their chairman or chief executive, or possibly by their customers. Not so Stagecoach, the transport conglomerate. It is led by God. The co-founder and entrepreneurial force behind the ebullient but now mishap-prone firm, Brian Souter, is devout and sincere in seeking guidance from the Creator. Not many PLCs can claim divine consultancy.
The trouble is, it seems, that God’s commercial judgements are not infallible; or is it that His messages are becoming garbled in transmission?
The story of Stagecoach has been a glorious romance. Souter and his sister Ann Gloag started their commercial adventure plying one second-hand coach between Perth and Dundee. They ate and slept their new project.
Their timing could not have been happier. The Conservatives deregulated buses. Stagecoach could ply its wares between any destination and at any time. The sleepy quasi-municipal bus fleets were easily knocked out or bought up.
Stagecoach blossomed from a Tayside curiosity into a truly international operation, with 95 per cent of its revenues outside of Scotland. It graduated from buses to trains and then to airports, acquiring Prestwick (or Kilmarnock International, as unkind critics call it).
But now Stagecoach is having a dreadful time. Its shares have slumped to a total value of £1.2bn, having been worth £5bn two years ago. It seems unable to put a foot right. All its acquisitions suddenly look more like liabilities than assets.
Stagecoach evidently thought it smart to announce the resignation of the latest boardroom casualty, Jim Leng, just after the Stock Exchange had closed for Easter. This was perfectly lawful, but sneaky. That single act of artfulness transformed the City’s perception of the company from a troubled one to a deceitful one.
Souter is not the cheery bus driver made good that he likes to pretend to be. He is a sharp-witted CA who trained at Arthur Andersen. He can count beans better than most. Could it be possible that the sequence of misadventures is really a very clever tactic by Souter to so knock his own company share price that he and his sister could take it private again after finding public quotation such a thankless burden?
The highly influential “Lex” column in the Financial Times floated the idea, and it has since become the perceived truth. It is a pity that recently resigned or sacked directors are so discreet. Leng says that he resigned over “corporate governance matters”, but nobody knows what that means and he is not translating.
Mike Kinski, who was beheaded by Souter after two years as chief executive of Stagecoach, has just been parachuted into Hyder, the largest PLC in Wales, by its new owners, Nomura of Japan. He, too, is saying nothing, although the rapid twitching of his eyebrows implies a great deal.
The truth may be neither cock-up nor conspiracy. Souter is no fool, but the tide of novelty that was released by deregulation and privatisation has evaporated. Both buses and railways were in uncharted landscapes ten years ago. Now everyone can interpret the figures more coherently.
One huge move was to buy Coach USA, the American bus fleet, for £770m last year. It also acquired £400m in Coach debt, too. This seems to have broken the spell. City institutions that had come to adore Stagecoach and its delicious profits suddenly saw where they would end. The sales of marginal assets have not translated into calm. The observers have read them as confirmation of further adversity.
Going private would relieve the founding family of all the formal hassles of PLC status, but it would compromise its fund-raising abilities. The only firm to have reverted to private status with any success has been Richard Branson’s Virgin. He hated the constant grilling by analysts and has been a happier man since he dropped out of the Stock Exchange’s rule book.
Companies are transient creatures. They live, flourish and die, but they normally survive longer than Stagecoach seems likely to. Souter knows he is as good as his last deal or his last dividend. A success, even a modest one, could change sentiment from “Sell” into at least a “Hold”. Nobody quite sees it as a “Buy”.
Some argue that the market has taken very adversely to Souter’s personal crusade against the Scottish Parliament and its wish to repeal Clause 28. He promised to commit £1m to fund a campaign to “Keep the Clause” and has been busy recruiting like-minded business leaders to the cause. The City is neither liberal nor illiberal about homosexual rights, but it does like to think that a company’s leader is diligently at work making the share- holders richer. Neither God nor Souter have so far done very well in the new millennium.
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