Arriva continues its drive into Europe.

Byline: By Nigel Stirling

Transport giant Arriva has snapped up an Italian bus company for pounds 9.4m as part of its continued drive into Europe.

The Sunderland-based company will take a controlling 80% stake in SAVDA Group, which predominantly operates public bus services in the Piemote and Valle d'Aosta regions of Northern Italy. The Italian company's five shareholders will sell Arriva the remaining 20% in 2008.

Arriva chief executive Bob Davies said: "The remaining shareholders will share in profits and will sell the stake for a price to be determined by the business's performance over that time.

"But we will have full management control from the time the transaction is completed, sometime in the fourth quarter of this year."

The company, which last year turned over pounds 22m, adds to Arriva's existing businesses in Italy. In July 2002, Arriva acquired SAB Group, a bus company which operates in the north of Italy, and last May Arriva further expanded its operations, acquiring 49% of bus company SAG.

Arriva has built its European business over the past eight years to include investments in Germany, the Netherlands, Denmark, Norway, Spain, Italy and Portugal. Turnover from its European operations has grown to pounds 1bn over that time, representing a third of the group's total turnover.

Davies said the European transport sector, which historically has been state-owned, was fast-moving with a rapid transfer into private ownership and other foreign transport operators starting to make their mark.

Earlier this month, the company won a six-year contract, worth pounds 120m, to operate a substantial new public transport system north of Amsterdam.

"EU legislation over the past two to three years has required that a substantial amount of public transport be put out to tender. We have won contracts being able to provide examples of running transport systems for 20%-25% less cost than the previous incumbent."

Davies did not rule out future acquisitions. "It is recognised that there is excellent opportunities for growth outside the UK. Last year we invested pounds 70m in continental Europe," he said.

"This is not an unreasonable amount of investment and it is entirely possible that we could continue that level of investment. It depends on the opportunities that arise and the rate at which we can absorb them."