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The battle for National Express heated up today as arch-rival Stagecoach revealed that it is in exclusive talks to buy parts of the business from the consortium which has made an indicative takeover bid for the ailing bus and trains firm.
National Express shares jumped 25¾p or 7.5% to 371¼p as Stagecoach also said that it is still considering making its own full takeover bid.
If it did, that would become the third bid for National Express in the last month since the group lost its chief executive Richard Bowker and was forced to hand its East Coast rail franchise back to the Government.
First Group had an initial bid approach rejected at the end of last month, and last week said it had pulled out of the bid battle.
At the same time a consortium of private equity firm CVC and the Spanish Cosmen family group — which is National Express's largest shareholder — said it had put in an indicative cash offer.
That opening shot could be as low as a 325p a share valuing National Express at just £500 million. At that level National Express's board, led by chairman John Devaney, is expected to reject the offer. It is reported to be looking for a bid of at least 400p a share, which would value the group at just over £600 million.
If Stagecoach manages to muscle into the consortium and turn it into a break-up, bid analysts said that it would be most interested in National Express's UK long-distance coach and US bus services.
Andrew Fitchie, an analyst at Collins Stewart, pointed out: “It would have no interest at all in UK rail — it has problems of its own there — nor in Spain.”
Analysts said they thought that if Stagecoach, which is run by Brian Souter, launches its own takeover bid it would almost certainly be an all-share offer. That might not prove attractive to National Express's largest shareholder.
Four years ago the Cosmen family sold its Spanish coach business to National Express for £149 million plus a 10% stake in the UK company. Since then it has raised its holding to 18.5%.
National Express is saddled with £1.2 billion of debt which it is desperately trying to reduce. That is largely what led to its falling out with Transport Minister Lord Adonis when it tried to renegotiate its loss-making East Coast rail franchise.
When the group produces its first-half results later this week, chairman Devaney is likely to argue that the business has a good, independent future if it cuts costs and pays down much of its debt.
Stagecoach, which runs South West Trains, East Midlands Trains and is joint owner of Virgin Trains, could face regulatory problems if it tries to take over all or parts of National Express.
It runs some 7000 buses and coaches in the UK and would gain a dominant share of the long-distance market.
First Group could return to the fray, analysts said today. If it could join in the break-up consortium bid it might well be keen to buy National Express US operations which would dovetail neatly into its own extensive fleet of school yellow buses in America.
