Elliott pushes shareholders on National Express deal

American hedge fund Elliott set out its plans to break up British transport group National Express as it met with other shareholders yesterday.

The fund, which owns 17.5 per cent of National, is trying to force a boardroom shake-up with the ultimate aim of restructuring the company.

Elliott is proposing three main options for National: consider a tie-up with another UK rival, such as Stagecoach; expand its US operations away from the under-pressure UK and European market, or sell some of its key assets, which Elliott believes will raise more than the company's current value.

It said the proposals would improve shareholder returns by at least 25 per cent, with the potential for a 55 per cent boost.

New York-based Elliott, worth about $17 billion (10.5bn), said: "National Express is currently facing steep challenges to its UK businesses, in part due to the emerging liberalisation and consolidation in the European mass transit market. As a result, the markets that it operates in are set to become even more competitive, and therefore it is critical that the board considers alternative strategic options to overcome this challenge now."

The hedge fund is asking other investors to elect three new directors at the company's AGM on 10 May, and on Tuesday claimed it had the backing of National's second biggest shareholder, Spain's Cosmen family.

Yesterday the board of the UK transport group once again hit back at Elliott, saying that the firm did have an independent future in its existing markets.

It said: "National Express believes that its scale is a significant competitive advantage in a liberalising European market.

"The board also believes that Elliott's proposed strategic options are focused on the short term and ignore the group's superior longer-term value creation opportunities."

National has also condemned the attempt to get directors appointed outside the usual process, claiming it contravened the UK corporate governance code.