Transport giants Stagecoach and National Express in merger talks

Transport giant Stagecoach has confirmed talks over a potential all-share takeover by rival National Express in a move that would bring together two of the UK’s biggest bus groups.

Under the terms of the possible all-share tie-up, National Express would own around 75% of the combined group and Stagecoach shareholders around 25% in a deal that would value Stagecoach at £445m.

The potential coming-together of the firms has come after both were hit hard by the pandemic, seeing passenger numbers slumping due to lockdowns, remote working and a switch away from public transport.

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The groups have outlined plans to slash costs as part of the potential merger, with National Express saying it expects to find annual savings of at least £35m, with around 25% by the end of the first year.

If the talks lead to a deal, the combined group would see Stagecoach chairman Ray O’Toole become chairman of the board. National Express boss Ignacio Garat would be chief executive of the enlarged group.

National Express has bus and coach networks across the UK and Spain, while it also runs school bus services in America and a rail franchise in Germany.

But Stagecoach is UK focused and is Britain’s biggest bus and coach operator.

National Express said the deal would allow it to use Stagecoach’s depot network to run and maintain its coach operations, while also allowing it to expand its new growth initiatives – such as private coach hire, corporate shuttle and accessible transport – across Stagecoach’s UK operations.

The talks come after National Express rejected a £1.7bn merger deal first mooted by Stagecoach in 2009.

This former attempt at a merger between the two would have seen Stagecoach own the majority of the combined group, with National Express left with up to 40%.

The two firms stressed that talks are ongoing and that there is no certainty a formal offer will be made.

National Express has until 5pm on October 19 to make a firm offer or walk away, under City Takeover Panel rules.

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