Spaniards pile pressure on National Express

Published on Friday 30 October 2009 20:51

NATIONAL Express's largest shareholder turned the screw in the takeover saga surrounding the embattled transport group yesterday by accusing it of being cavalier in its rejection of a bid approach from Stagecoach.

The criticism by Spain's Cosmen family, who own 18.5 per cent of the UK rail and bus operator, prompted a verbal volley from Perth-based Stagecoach that its all-share approach had been badly treated.

Concerns were expressed by the Cosmens over what they claimed was National Express's lack of a "well defined strategy" the day after the group revealed it had ended talks with its Scottish suitor.

The wealthy family and CVC Capital Partners recently pulled out of a 765 million consortium takeover approach for National that would have involved the sale of some assets to Stagecoach. That withdrawal triggered the rebuffed solo approach by Brian Souter's company.

In their statement yesterday, the family said: "We are concerned that there has not been a sufficiently full and thorough assessment of all the available options to address the company's short and longer term challenges, and, in particular, of Stagecoach Group's merger proposal."

A spokesman for Stagecoach said: "This reaffirms our view that they (National] did not take our approach seriously. It was a value-enhancing approach that enjoyed a lot of support from shareholders."

National has said it walked away from the Stagecoach proposal on Wednesday night because it feared a deal could not be done by Christmas.

That is when National faces 5m in penalty interest payments on its near-1 billion debt. Instead, the company said it wished to proceed with a City fund-raising to ease its debts.

But the Cosmen family, a member of which, Jorge, is deputy chairman of National, said Stagecoach's approach "could have addressed the fundamental financial and strategic issues" facing the business.

The family said they were worried that the National board "risks losing further value for all shareholders by not keeping the company's options open" – and urged it to seek independent financial and legal advice in reviewing the situation.

National's shares have lost about 30 per cent of their value since the beginning of 2009.

The company will hand its East Coast Main Line franchise from Edinburgh to London back to the government because of poor trading, by the end of this year.

The group yesterday acknowledged the Cosmen statement, but said it had carefully explored a range of options during 2009. It said building up its capital structure via a City rights issue, speculated to be in the region of 300m, was the best way forward.

Sources say that at one stage a dual approach was suggested – a rights issue and a merger with Stagecoach – but that National considered this impracticable.

National's shares closed up 4p at 325p yesterday, while Stagecoach reversed 1.9p to 144.8p.