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Stricken train and coach company National Express was plunged deeper into crisis today as the 500p-a-share, £1.7 billion rescue takeover offer for the company evaporated.
The news that National Express's largest shareholder, the Cosmen family from Spain, their private-equity bidding partner CVC and the rival UK rail company Stagecoach were walking away from their takeover bid sent shares in the group plummeting 28%, down 131p to 339p.
The City was feverishly speculating why the bidders walked out at the 11th hour and what the future might be for National Express as it now needs to raise substantial funds from its shareholders.
The plan had been for the Cosmens, who already own 18.5% of National Express, and CVC to fund the offer and do a side deal with Stagecoach, the co-owner of Virgin Trains and operator of Waterloo's South West Trains and St Pancras's East Midland Trains.
Stagecoach was to take control of National Express's Liverpool Street and Fenchurch Street operations serving Essex and East Anglia.
National Express has already lost control of its flagship King's Cross operations after being sacked in the summer by the Department for Transport. That plunged the company into crisis and prompted chief executive Richard Bowker to walk out for a lucrative job in the Middle East.
It also left deputy chairman Jorge Cosmen with the conundrum of how best to protect the interests of his family, who became shareholders in National Express when they sold their Spanish coach and bus operations.
National Express insiders are privately seething that after three months of talks which had seen the bidders sequentially take their offer price to as high as 500p they should now walk out even though the Takeover Panel was happy to extend the bid deadline.
In a statement to the Stock Exchange, National Express said: “We believe that strengthening the group's balance sheet through an equity fundraising is now the most appropriate course of action and is a key objective in order to unlock the inherent value of the group for all shareholders.”
The Cosmen family has said it will back a fundraising but only “within certain parameters that the Cosmen family has communicated to the board of National Express”.
It is expected National Express will launch a £350 million rights issue next week. That would represent around half the current market capitalisation. The company needs the money to pay down its £1 billion debt mountain. Its woes began last year when it became increasingly plain it had hopelessly overbid for the King's Cross East Coast Main Line and underestimated the effects of a recession which saw it unable to pay back excess profits to the Treasury.
