Fresh bid values National Express at £765m

Published on Thursday 3 September 2009 21:10

THE consortium stalking National Express yesterday lifted its indicative offer to 500p a share, valuing the beleaguered transport group at £765 million.

The offer from Spain's Cosmen family and CVC Capital Partners came as Perth-based Stagecoach confirmed it had agreed in principle to buy National Express's UK bus and rail business from the consortium if a bid succeeds.

City analysts said that the improved offer may be enough to persuade institutional shareholders at National Express, which is struggling under 1 billion of debt and whose chief executive Richard Bowker left earlier this year.

Douglas McNeill, transport analyst at broker Corporate Synergy, said: "Shareholders will look at this seriously as it would mean they would not have to commit to the alternative – a National Express rights issue speculated to amount to between 300m and 400m.

"It is an attractive price while still allowing the consortium a bit of upside."

CVC and the Cosmen family – which is National Express's leading shareholder with an 18.5 per cent stake – had previously made a rejected indicative bid approach of 450p a share.

The consortium said yesterday it wanted a board recommendation to go ahead or it would withdraw what it called a "compelling proposal", sending National Express shares up 13.08 per cent to 465.9p.

However, CVC and the Cosmens reserved the right to increase the final offer if a third party made a rival bid for National Express.

The consortium said that the offer would bring "stability and certainty" to the company.

Stagecoach, which also yesterday reserved the right to make or participate in an offer for National Express, said it had held "constructive discussions" with the Department for Transport on the possible change of control of the group's rail operations.

National Express's loss-making East Coast franchise between London and Edinburgh will revert to state control regardless of a takeover, according to the Stagecoach statement.

But National Express still runs the profitable East Anglia franchise and London commuter line c2c. Stagecoach already operates the South West Trains franchise and has a 49 per cent stake in the Virgin Rail joint venture that runs the West Coast franchise between Glasgow and London Euston.

Analysts said yesterday's developments suggest that the consortium would be left with National Express's UK coach operations and its bus business in Spain and North America if a bid was successful.

The consortium had previously said the offer would be conditional on retention of the two remaining rail franchises, but said yesterday this was no longer the case.

National Express became a takeover target in late June when Aberdeen-based FirstGroup tabled an offer that was rejected.

National Express said yesterday that it was evaluating the latest offer from the consortium.