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THE battle for National Express got into gear today as its biggest shareholder said it has made a private-equity backed offer of 450p for the struggling trains and coach group.
The offer values National Express at £680 million but does not include the near-£1 billion mountain of debt the bidder would also have to take on.
The announcement of the offer from the Spanish Cosmen family, which already owns 18% of National Express shares, in league CVC Capital Partners now puts the heat on arch-rival Stagecoach to reveal its intentions.
The Cosmens, whose family head Jorge is National Express's deputy chairman, put a price on its bid today after the company's chairman John Devaney let it be known to shareholders that they had a stark choice: agree to a £350 million fundraising rights issue to rebalance the company's accounts or opt for a takeover.
In a statement to the Stock Exchange, National Express said its board, ex-Jorge Cosmen, is considering the offer but is also continuing “to explore a range of options to accelerate the reduction of the Group's borrowings in a way that will create value for all National Express shareholders.”
It continued: “In this context, the board has been discussing a potential equity fundraising with investors should a recommendable offer not be forthcoming.”
The Cosmen-CVC consortium has previously made it clear that it would only go ahead with an offer so long as National Express is not stripped of its Liverpool Street-to-East Anglia and Fenchurch Street-to-South Essex rail franchises.
That condition has been put in after National Express was sacked from its flagship rail franchise, the Kings Cross-East Coast Main Line service. It was stripped of the franchise by Transport Secretary Lord Adonis after it admitted it could not keep up with payments to the Treasury that were promised by its then chief executive Richard Bowker, who this summer walked out on the company.
The Cosmens hold their stake in National Express after the group's expansion into the Spanish bus and coach market, which helped saddle National Express with a level of debt that has threatened to breach its borrowing covenants with its banks.
All eyes are now on Brian Souter, the founder and a chief executive of Stagecoach, who has also expressed an interest in buying National Express.
A takeover by Stagecoach would, however, would raise competition concerns as its owns or part-owns South West Trains out of Waterloo and Virgin Trains out of Euston as well as significant coach and bus interests.
Reader views (1)
National Express performance on the east coast line to London this morning was typically disasterous. Good luck to anyone wanting to fork out cash for this disgraceful Company. Also, good luck with the NE staff one I watched this morning best effort to assist paying customers was to badly stiffle a yawn. Good effort
- Steve, London
