National Express in talks to buy Stagecoach

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National Express is in talks to buy smaller rival Stagecoach in a deal that would bring together two of the UK’s largest transport operators as the industry emerges from the pandemic.

Stagecoach said on Tuesday that its shareholders would receive 0.36 new National Express shares for each Stagecoach share they own, giving them about 25 per cent of the combined company.

That would represent a 23.2 per cent premium on Stagecoach’s three month average share price, valuing the Perth-based group at about £442m.

The deal would combine National Express, which owns the UK’s largest coach fleet and has significant international operations, with one of the country’s biggest bus operators.

The boards of both companies said a deal would be a “strategically compelling proposition with the potential to realise significant growth and cost synergies” such as continuing to expand in the US, combining their routes and cutting the number of depots.

Stagecoach founders Sir Brian Souter and Dame Ann Gloag said in April that they would reduce their shareholding over the next decade, which many saw as paving the way for a takeover.

Analysts say the UK bus and coach industry is ripe for consolidation as it emerges from the devastating Covid-19 pandemic and needs to invest heavily in expensive zero emission buses.

National Express has 28 days to decide whether to make a firm offer.