£765m National Express bid scrapped

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Spain's Cosmen family, the group's largest shareholder with 18.5%, had been working on a potential deal with buy-out firm CVC since July.

But shares slumped by as much as a third as the would-be buyer withdrew, wiping almost £250 million from the value of the company at one stage.

National Express, which is labouring under debts of almost £1 billion, has been in the takeover spotlight after its rail business was hit by recession.

The company is due to hand back its loss-making East Coast Main Line franchise, which it paid too much for at the height of the boom, to the Government by the end of the year.

The Cosmens took their stake in 2005 when National Express entered the Spanish coach and bus market with the acquisition of Alsa, which was owned by the family. They will instead support plans for National Express to strengthen its debt-laden finances by tapping shareholders for funds.

Panmure Gordon analyst James Cooke said: "National Express is now likely to raise new equity, possibly around £400 million, in order to strengthen its stretched balance sheet."

Reports suggested concerns among would-be buyers over the refinancing terms for part of National Express's debt due next year.

But the firm said it continued to perform "resiliently" despite challenging trading conditions. It is in talks with major shareholders over the fundraising to ease its £1 billion debt pile and give the group a "strong, stable platform".

"The board believes that National Express has a strong future as an independent listed company, offering a compelling investment case building on the strength of its individual businesses."