National Express insisted its proposed £1.9 billion merger with Stagecoach is “superior” to the rival bid by German investment group DWS as it sought to win over shareholders.
The group said it believes the 105p-a-share bid from DWS “materially undervalues” Stagecoach, 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.
Stagecoach said the new deal marks a significant improvement on National Express’s offer, which valued Stagecoach at around £470 million, while insisting it also offers greater certainty for workers and investors.
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 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% premium to the DWS offer.
National Express 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 £45 million 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.
It 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% 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 it would have been a “long and quite arduous process”.
