BUS and train group Arriva last night widened its stronghold in Europe after acquiring a stake in a family-owned Portuguese transport company.

The Sunderland-based group said it paid £41m for 21.5 per cent of privately-owned passenger transport group Barraqueiro.

A spokesman for Arriva said funding for the deal was helped by the sale of its vehicle rental business AVR to Darlington-based Northgate in February for £129m.

Arriva is buying Barraqueiro's treasury shares, which account for 15 per cent of the share capital, and will acquire the 6.5 per cent balance from the private shareholders. The company will be entitled to appoint two directors to Barraqueiro's nine-person board.

Barraqueiro is owned by the Pedrosa family, which has developed the business into the largest passenger transport operator in Portugal, with 4,800 employees, 2,000 buses, and 18 train routes.

It has key operating territories in the south of the country and a 34 per cent participation in Lisbon's new tram system. It also has a loss-making freight business.

In the year to December 31, Barraqueiro had a turnover of 268.4m euros (£183m) with profit after tax of 4.4m euros (£3m) and net assets of 99.1m euros (£67.5m). The majority of the cash from Arriva's investment will be ploughed back into the business to fund its growth.

David Martin, chief executive of Arriva, said: "Barraqueiro has a strong, well-respected management with a wealth of understanding of the market, and significant experience in multi-modal operations.

"This investment is another step in developing Arriva's access to the evolving public transport market in Portugal."

Arriva said the investment will have no impact on its other Portuguese operations, which include its Transportes Sul do Tejo business, which operates 650 buses south of Lisbon, and its inter-urban bus and coach services operated by 220 vehicles in northern Portugal.

An Arriva spokesman said: "The future structure of the Portuguese transport market is ripe for change and Barraqueiro is well positioned to take advantage of this, as is Arriva with its own operations."

Arriva is well on track to become the largest transport organisation in Europe.

It already has operations in Denmark, Germany, Italy, the Netherlands, Spain, Sweden and the UK.