BUS and rail firm Arriva today agreed a £1.59 billion takeover by German operator Deutsche Bahn to create a new European transport giant.

The move combines the UK’s second biggest bus firm and the operator of Welsh and CrossCountry rail services with a business which carries five million train passengers a day in Germany.

Deutsche Bahn already has a presence in the UK - running services such as the Chiltern Railways route between London and Birmingham Snow Hill - and owns the company which runs the Royal Train.

But the group is looking for increased scale through the deal to take advantage of liberalised European transport markets.