StageCoach said it was no longer recommending National Express' 445 million pound offer as it had agreed to an offer from Inframobility UK Bidco Ltd.

Inframobility is owned by Pan-European Infrastructure III, which is in turn managed and advised by infrastructure investment manager DWS Infrastructure.

StageCoach shares closed 37.2% higher at around 104.4 pence, almost in line with Inframobility's offer price of 105 pence per share in cash.

Pan-European Infrastructure III said cash payable to StageCoach shareholders would be financed through equity capital.

DWS Infrastructure is building a transportation business and has invested in Belgian public bus operator Hansea.

Jonas Edholm, lead portfolio manager for SKAGEN Focus, a value-based and contrarian global equity fund, said the DWS deal was "far superior" and its all-cash part made that offer more attractive, while the National Express one was an all-stock deal.

"I think one of the major issues with the National Express deal was the potential anti-trust UK competition authority investigation," added Edholm.

"We held a 2,5% position in the fund in Stagecoach at the time of the offer from DWS," Edholm said.

SKAGEN Focus is part of Norway-based fund company SKAGEN AS.

DWS Infrastructure said its offer represented greater certainty for Stagecoach shareholders, employees, passengers and other stakeholders due to "lower execution risk, a faster timetable, lack of competition issues and greater continuity with management".

National Express and StageCoach have been in talks to merge their businesses since September last year.

Britain's competition regulator in January issued an order preventing StageCoach and National Express from disposing of key UK assets as the watchdog reviewed their merger.

National Express, noting the Inframobility announcement, advised its shareholders to take no action in respect of the offer. National Express shares closed 25.5% higher on Wednesday.

($1 = 0.7623 pounds)

(Reporting by Aby Jose Koilparambil and Yadarisa Shabong in Bengaluru; Editing by Anil D'Silva and Jane Merriman)

By Aby Jose Koilparambil