Arriva surprised the bus industry before Christmas with its £10.3m proposed acquisition of Alternative Investment Market-listed bus and coach operator Tellings Golden Miller.

The deal means that the Sunderland-based group has ironically re-acquired its Colchester bus business that it sold to TGM in 2004 citing poor financial performance.

TGM has largely concentrated on its core coach and airline crew transfer businesses since the disposal of its London bus operations to National Express in 2005. It currently operates in excess of 200 vehicles and has bases in the north east of England, East Anglia and the South East.

Arriva will pay 45p per share in cash for the business, representing a 47.5% premium on TGM's closing share price of 30.5p on December 19. TGM's director have unanimously recommended that shareholders accept the offer.

Commenting on the deal, TGM chairman Steve Telling said that the offer provided an "attractive exit" for the group's shareholders. He also said that the purchase meant employees and the business would have the backing and support of a strong multinational group.