National Express hits back over rival offer for Scottish bus giant Stagecoach

National Express has insisted that its proposed £1.9 billion merger with Perth-based Stagecoach is “superior” to the rival bid by German investment group DWS as it looks to win over shareholders.

The group said it believes the 105p-a-share bid from DWS “materially undervalues” the Scottish transport operator, but has held back from sweetening its offer.

It added that its own tie-up proposal offers a “superior value creation opportunity”, with a so-called potential illustrative look through value of up to around 170p a share for Stagecoach.

National Express was jilted last week when Stagecoach dropped its support for their merger and instead backed a £595 million takeover by DWS Infrastructure. It would allow Stagecoach’s headquarters to remain in Perth, where it has been based since 1980.

Perth-headquartered Stagecoach has grown over the past 40-odd years to become one of the biggest bus operators in the UK.

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Stagecoach said the new deal marks a significant improvement on National Express’s offer, which valued the Scottish firm at around £470m, while insisting it also offers greater certainty for workers and investors.

National Express said that, while its shares have been hit hard amid the pandemic, a recovery of the stock to pre-Covid levels of 421p a share would see its merger bid represent a 66 per cent premium to the DWS offer.

The coach operator said the merger of the two companies would “bring the best of both” firms to the tie-up and allow them to expand further in an “increasingly ‘bus-friendly’ UK market”. It reiterated aims to save at least £45m a year from the merger.

“In a period that has seen a surge of private equity firms acquiring British companies, the combination represents a rare example of two UK listed companies combining to form a global leader in their industry,” National Express said in a statement to investors.

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The group urged shareholders to “take no action” in relation to the DWS offer.

Stagecoach had agreed to the National Express deal in December, which would have seen its shareholders take a 25 per cent stake in the enlarged group.

But the Competition and Markets Authority (CMA) launched an investigation into the deal, and served a so-called initial enforcement order in January stopping the firms from combining operations or selling any UK businesses while it carries out the probe.

Stagecoach said the move would delay the planned sale of the marketing, retail and customer service operations of its inter-city coach businesses to ComfortDelGro Corporation.

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But it said the merger partners continue to believe the sell-off will be a “comprehensive solution to any competition concerns that might arise from their overlapping coach operations”.

December’s deal, which was struck after talks between the pair were revealed in September, would create a combined business worth some £1.9bn with a fleet of about 40,000 vehicles and a workforce of 70,000 people.

About 50 roles are expected to be cut under plans to slash annual costs by at least £45m following the merger.

Stagecoach, which was founded in 1980 by Sir Brian Souter and his sister Dame Ann Gloag, is UK-focused and is Britain’s biggest bus and coach operator.

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