The Competition and Markets Authority (CMA) is to investigate the proposed takeover of Stagecoach by National Express.
As a result, CMA has issued an initial enforcement order that prevents either business from disposing of material UK assets at the current time. Both groups and their subsidiaries will thus maintain their current respective shapes while CMA’s inquiry commences. The Authority has not yet set the dates upon which that work will start; when it will invite comment; or when it will issue a phase one decision.
In a joint statement, National Express and Stagecoach says that they do not anticipate that the development will delay the combination of the two businesses, which they still expect to complete around the end of 2022. Conditional agreement for the deal was reached in December 2021.
However, the planned disposal by Stagecoach to ComfortDelGro of its 35% stake in the Scottish Citylink joint venture and the marketing, retail and customer service activities of the Megabus and Falcon scheduled coach brands will be delayed. That deal is worth £8.75m and had been expected to complete on 28 February.
Despite the setback, National Express and Stagecoach have underlined their belief that the coach disposal to ComfortDelGro represents a comprehensive solution to any competition concerns that might arise from their “overlapping” operations in that sector.
Both groups say they will engage with CMA to allow the deal with ComfortDelGro to complete as soon as possible. When announcing that sale, Stagecoach had claimed that it “proactively addresses potential regulatory considerations” around the combination of its business with National Express.