National Express seals takeover of rival operator Stagecoach

Proposed £1.9bn company will boast a 40,000-strong vehicle fleet and employ around 70,000 people

Last modified on Tue 14 Dec 2021 07.41 EST

National Express and rival Stagecoach have sealed an all-share deal that will forge a £1.9bn transport operating group.

The proposed merger is expected to complete in late 2022, bringing Stagecoach’s UK local bus operations together with National Express’s intercity coach network.

Stagecoach, which has shrunk back after selling its US operations and being squeezed out of UK rail, will be valued at about £500m, a third of National Express. Its Megabus intercity coach operation will be sold off, to alleviate any competition concerns.

The group will be headquartered at National Express’s home in the West Midlands, where it runs most bus services. The combined group will have a 40,000-strong vehicle fleet and employ about 70,000 people. National Express also exited UK rail after selling its last franchise in 2017 but still runs trains in Germany and buses in the US, Canada, Morocco and Spain.

Stagecoach was launched by Sir Brian Souter and his sister, Dame Ann Gloag, in 1980. The takeover marks the end of the Souter family’s long interest in the sector, having grown from buying out a small local bus company to one of the main players in Britain’s privatised bus and rail industries.

However, the operator’s fortunes dipped when it overbid for the East Coast rail franchise and its Virgin Trains operation went bust. It also faced battles over the re-regulation of buses as the tide started to turn in favour of local authorities being able to set routes again, with Manchester now leading the charge towards more public control.

Souter invited interest in the takeover when he started to sell down his holding this year. News of talks with National Express leaked out in September. Stagecoach’s board and Gloag, another major shareholder, have now all approved the deal, which will need to be ratified by shareholders from both companies.

In a joint statement, the boards of both companies said on Tuesday that the deal was “a highly compelling strategic proposition, with significant growth and cost synergies delivering strong value creation for both sets of shareholders as well as substantial benefits to the customers, employees and other stakeholders of both National Express and Stagecoach”.

The boards estimate the savings from combining operations at £45m a year. Stagecoach’s executives are expected to depart but its chairman, Ray O’Toole, will become chair of the new group, with National Express’s chief executive Ignacio Garat remaining at the helm.

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