GO-AHEAD group subsidiary Govia is looking to complete a deal to buy Connex South Central by the end of July.

Govia, 65 per cent owned by Gateshead-based Go-Ahead, has exchanged contracts with Connex Transport Limited.

Once completed, the deal will mean Govia, which is part-owned by French state railway firm SNCF, will be responsible for operating commuter trains on the South Central Network.

Govia has agreed to pay Connex £30m in cash. If passenger revenues exceed a certain level in the year ended January 5, 2002, then Govia will pay Connex a further £10m.

In the year to December 30, Connex South Central recorded a profit of £9m on turnover of £308m.

The acquisition will further strengthen Go-Ahead's presence in the UK railway services, more than doubling the number of passenger journeys in the group's rail division. Go-Ahead already operates the Thames Trains franchise.

Negotiations are continuing between Govia and the Strategic Rail Authority over the detailed terms of a 20-year franchise to operate the South Central network under the new brand, New Southern Railway.

Martin Ballinger, group chief executive of Go-Ahead, said: "The transfer of the Connex South Central franchise reinforces our position as a major operator in UK rail.

"Together with the acquisition of the British Midland ground handling businesses earlier this year, this further consolidates the group's position as one of the leading transport providers in the UK."