International bus and coach operator National Express has
confirmed it is in talks with rival Stagecoach over a merger of the two
businesses.
Under the terms of the potential deal, National Express
would own roughly 75 per cent of the combined group, while Stagecoach would own
around 25 per cent.
According to National Express, the merger would offer the
combined group “significant growth and cost synergies”, leading to the potential
for “at least” £35 million in cost savings within the first three years of
completing a deal. The company claims it has identified opportunities for
network efficiencies and optimisation, “shared operational best practice” and
eliminating duplicate overheads such as back office and IT processes. However,
the firms said the deal could see one-off costs of up to £40 million in the
first two years.
Both National Express and Stagecoach have suffered
financially in the wake of the pandemic, with the former’s revenue falling to
£990 million in the six months to 30 June 2021 from £1.03 billion the previous
year and the latter’s dropping from £1.4 billion in the year to 1 May 2020 to
£928 million this year.
National Express runs bus and coach services in the UK,
Spain and the US, as well as rail operations in Germany, while Stagecoach is
Britain’s largest bus operator.
If talks lead to a merger, Stagecoach chairman Ray O’Toole
would become chairman of the board of the combined group, while National
Express boss Ignacio Garat would become chief executive.
According to a statement to the London Stock Exchange,
National Express has until 19 October 2021 to make a firm offer to Stagecoach.