Deal switched

Stagecoach drops National Express for rival offer

Electric Stagecoach buses
Stagecoach is recommending a rival offer

Transport company Stagecoach has ditched its planned merger with National Express and agreed to a higher rival offer of £595 million.

The Perth-based company is recommending a bid from Inframobility UK Bidco, a company indirectly owned by a fund managed and advised by infrastructure investment manager DWS Infrastructure. It is priced at 105p a share in cash.

Stagecoach has therefore withdrawn support for the National Express bid, which valued the bus company at around £437m or 69.34p a share.

The DWS offer represents a 37% premium to Stagecoach’s closing share price of 76.55p on Tuesday.

Stagecoach shares surged this morning to trade just below the new bid price.

Hamish Mackenzie, head of infrastructure at DWS, said: “As a long-term investor in essential services with a strong track record in the UK and European transport sectors, DWS Infrastructure will back Stagecoach to rapidly capitalise on the growth opportunities presented by increased public and private investment in UK bus and coach.”

Stagecoach said the DWS bid offers greater certainty for investors and employees, with overall headcount in frontline operational roles expected to remain the same, as well as the retention of Stagecoach’s existing headquarter functions.

It added the new deal will also provide continuity at the top, with senior bosses set to remain in post.

Martin Griffiths, chief executive of Stagecoach, who was due to leave under the National Express deal, said: “The proposed offer presents a major opportunity to maximise the significant growth potential ahead as governments seek to deliver economic recovery, level up communities, provide better health outcomes for citizens, and transition to a net-zero future.

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“We believe it will open a new and exciting chapter for Stagecoach, backed by a team who share our vision for a more sustainable future.”

The offer from National Express would have given Stagecoach’s shareholders a 25% stake in the enlarged £1.9 billion business.

The proposed tie-up – which was agreed in December – is subject to an investigation by the Competition and Markets Authority which served a so-called initial enforcement order (IEO) in January stopping the firms from selling any UK businesses while its inquiry is under way.

The CMA has confirmed to Stagecoach that the offer from DWS will not engage the IEO. As such, the IEO will not prevent DWS from proceeding.

National Express said this morning that it “notes the announcement earlier today regarding the offer for Stagecoach by Inframobility UK Bidco Limited. A further announcement will be made in due course.

“In the meantime, the National Express Board advises shareholders to take no action in respect of the offer.”

… more follows

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