Yahoo Finance National Express’ £1.9bn tie-up with Stagecoach put on ice for merger probe
TRAVEL firm National Express's proposed takeover of smaller rival Stagecoach hit a bump today as the competition watchdog opened a merger investigation.
The Competition and Markets Authority has served an initial enforcement order putting the brakes on the £1.9 billion marriage. It cited "reasonable grounds for suspecting" the two bus and coach operators will "cease to be distinct", reducing competition in the sector.
The intervention temporarily prevents the duo from combining operations or offloading any assets: Stagecoach must delay the planned £9million sale of its inter-city coach businesses Megabus and South West Falcon to Singapore's ComfortDelGro.
Both companies nevertheless remained hopeful the deal will complete before the end of 2022.
Stagecoach said: “We do not expect the IEO (initial enforcement order) to materially affect the day-to-day operations of either National Express or Stagecoach, and the parties will continue to work with the CMA in relation to its review of the combination."
The two companies agreed an all-share merger last month in a deal that will create a combined group worth about £1.9 billion with a fleet of some 40,000 vehicles and a workforce of 70,000.
Around 50 managerial roles were expected to go as part of £45 million drive to cut costs.
Under the terms of the tie-up, National Express shareholders would own around 75% of the combined group and Stagecoach shareholders around 25%.
The merger comes as both firms have been hit hard by the pandemic, with passenger numbers slumping due to lockdowns, remote working and a switch away from public transport.
National Express has bus and coach networks across the UK and Spain, and runs school bus services in America and a rail franchise in Germany.
Stagecoach, 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.
Shares in National Express were up 6p, or 2.4%, to 262p on the FTSE250. Stagecoach was up 2.5% to 94p.
