Transport group Stagecoach has ditched its support for a £1.9 billion merger with National Express and agreed to a higher rival £595 million takeover.
Stagecoach said it is recommending an acquisition by investor DWS Infrastructure for 105p a share in cash and has withdrawn support for the National Express bid, which valued Stagecoach at around £437 million.
The National Express and Stagecoach tie-up – which was agreed in December – is being investigated by the Competition and Markets Authority (CMA), which served a so-called initial enforcement order in January stopping the firms from combining operations or selling any UK businesses while it probes the deal.
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, 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.
“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 DWS offer marks a 37% premium to Stagecoach’s closing share price of 76.55p on Tuesday.
It also significantly tops the National Express offer, which was worth just over 69.34p a share.
The offer from National Express would have given Stagecoach’s shareholders a 25% stake in the enlarged £1.9 billion business.
DWS already has a number of long-term infrastructure investments in the UK, such as Yorkshire Water owner Kelda and Peel Ports, as well as in other European transport groups, including Belgian public bus operator Hansea.
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.”
