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    NEX   GB0006215205

NATIONAL EXPRESS GROUP PLC

(NEX)
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National Express in talks for all-share takeover of Stagecoach

09/21/2021 | 02:33am EDT

* Stagecoach shareholders would own 25% in merged group

* Potential deal would value Stagecoach at 445 mln stg

* Stagecoach shares jump 20%, National Express up 7%

* Companies say no certainty a formal offer will be made

LONDON, Sept 21 (Reuters) - British transport company National Express is in talks to acquire rival operator Stagecoach Group in an all-share deal, offering scope for cost savings and underpinning their recovery from COVID-19.

The tie-up, which would value Stagecoach at about 445 million pounds ($609 million), comes as government support to help the companies get through the pandemic is due to expire.

National Express has bus and coach operations in Spain and Britain, runs school buses in the United States, and has a German rail contract.

Stagecoach, solely focused on Britain, is the country's biggest bus and coach operator. The company was founded by Brian Souter and his sister Ann Gloag in Perth in 1980, starting out with just two buses bought with their father’s redundancy money.

They still own stakes in the company - Souter has about 14.55% and Gloag around 10.47%, based on Refinitiv data.

Under the terms of the potential takeover, Stagecoach shareholders would receive 0.36 new National Express shares for each Stagecoach share, giving them a 25% stake in the merged group.

That represents an 18% premium on the closing price of Stagecoach's shares on Monday.

Stagecoach's stock jumped 20% to 81 pence in early trading on Tuesday. National Express rose 7% to 239 pence per share, giving it a market value of 1.48 billion pounds.

During the pandemic, both Stagecoach and National Express received government support to keep services running when passenger numbers were down, but that funding will end in the coming months.

Transport usage is starting to recover as workers return to offices, but is still not near its pre-pandemic levels.

The companies said the tie-up would make pre-tax cost savings of 35 million pounds per year through efficiencies such as National Express utilising Stagecoach's depots for its coach operations.

Stagecoach runs the megabus service, which like National Express, operates coach services between British cities.

Citi analysts said the deal would be positive for the transport sector. Rival UK operators FirstGroup and Go-Ahead also rose around 3% on news of the potential deal.

"We have argued for consolidation in the UK Public Transport given the structural challenges facing the industry, i.e. the pandemic impact on passenger volume and capex headwinds related to the adoption of environmentally-friendly vehicles," Citi said in a note.

The companies said that discussions and due diligence remained ongoing and there could be no certainty of a formal offer.

Should a deal go ahead, Stagecoach's chairman Ray O'Toole, a former chief operating officer at National Express, would become chair of the combined group, while National Express chief executive Ignacio Garat would continue as CEO of the merged entity. ($1 = 0.7310 pounds) (Reporting by Sarah Young; Editing by Kate Holton, Michael Holden and Jane Merriman)


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
COMBINED GROUP CONTRACTING COMPANY - K.S.C. (PUBLIC) -0.56% 0.357 End-of-day quote.77.61%
FIRSTGROUP PLC 2.98% 93.4 Delayed Quote.22.57%
NATIONAL EXPRESS GROUP PLC 2.05% 229 Delayed Quote.-5.48%
STAGECOACH GROUP PLC 0.98% 77.35 Delayed Quote.3.44%
THE GO-AHEAD GROUP PLC 3.97% 812.5 Delayed Quote.-20.62%
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Financials
Sales 2021 2 279 M 3 137 M 3 137 M
Net income 2021 -23,2 M -32,0 M -32,0 M
Net Debt 2021 1 234 M 1 698 M 1 698 M
P/E ratio 2021 -117x
Yield 2021 -
Capitalization 1 404 M 1 934 M 1 933 M
EV / Sales 2021 1,16x
EV / Sales 2022 0,88x
Nbr of Employees 47 971
Free-Float 87,2%
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Mean consensus BUY
Number of Analysts 7
Last Close Price 2,29 GBX
Average target price 337,86 GBX
Spread / Average Target 14 654%
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Managers and Directors
Jose Ignacio Garat Group Chief Executive Officer & Director
Chris Davies Group Chief Financial Officer & Director
John A. Armitt Chairman
Matthew Crummack Senior Independent Non-Executive Director
Ashley Steel Independent Non-Executive Director