National Express has criticised the rival offer for Stagecoach from DWS Infrastructure as one that “materially undervalues” the Perth-based business.
It comes after Stagecoach withdrew its earlier recommendation to shareholders that they agree a purchase by National Express. If the alternative deal with DWS proceeds instead, it is expected to complete during the first half of 2022, Stagecoach says.
National Express and Stagecoach had previously agreed an all-share acquisition. However, upon the announcement of a shift in favour of DWS, Stagecoach Chief Executive Martin Griffiths stated a belief that it would deliver “positive outcomes” to all concerned, including investors.
In the face of that, the National Express board has hit back by stating that a combination of its own business with Stagecoach would represent “a superior value creation opportunity when compared to the 105p per share DWS offer.” National Express says its own offer would unlock an illustrative look-through value of up to approximately 170p per Stagecoach share. It has thus encouraged Stagecoach shareholders “to take no action” in relation to the DWS approach.
In addition to the financial aspect, National Express says that a combination of its business with Stagecoach would provide significant opportunity to work with National Bus Strategy for England policies, and similar measures in Scotland and Wales, along with the pursuit of sustainability goals. Completion of such a purchase would also bring “significant benefits” to customers along with network efficiency benefits for the National Express scheduled coaching business, it adds.
Notably, National Express believes that a merger with Stagecoach would “facilitate an acceleration” of the grows of its Accessible Transport and Transport Solutions businesses. In the first information on plans for the National Express and Stagecoach names under any such deal between the two companies, the prospective purchaser has now said that both brands would be retained.
In January, the Competition and Markets Authority (CMA) announced that it was to investigate the proposed purchase of Stagecoach by National Express. CMA’s initial enforcement order issued at the same time prevents either business from disposing of material UK assets.
CMA’s action has delayed a separate deal between Stagecoach and ComfortDelGro that would have seen Stagecoach’s 35% stake in the Scottish Citylink joint venture and the marketing, retail and customer service activities of the Megabus and Falcon scheduled coach brands sold to the Singapore-based company.
