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UK coach firm giants confirm merger talks

Merger talks between the UK’s largest coach operators National Express and Stagecoach were confirmed today.

Stagecoach issued a statement to the London Stock Exchange saying a combination of the businesses would be a “strategically compelling proposition with the potential to realise significant growth and cost synergies, as well as delivering strong value creation for both sets of shareholders”.

The disclosure followed overnight media speculation, with Stagecoach saying: “Discussions between the parties and reciprocal customary due diligence remain ongoing and there can be no certainty that any offer will be made.”

However, it said the proposed deal with National Express would:

  • Deliver significant operational efficiencies across the combined networks, with, for example, National Express Coach utilising Stagecoach’s well-located depot network to run and maintain its coach operations;
  • Bring the ‘best of both’ from the combined operational capabilities of both businesses, whilst also delivering significant benefits to customers and passengers;
  • Accelerate the expansion of National Express’ growth businesses, such as private hire coach, corporate shuttle and accessible transport, across Stagecoach’s UK footprint, as well as deliver other growth and revenue synergies; and
  • Maintain strong relationships with key public sector stakeholders, best positioning the combined group in an evolving industry landscape, with quality public transport playing a critical role in delivering government priorities for cleaner, greener and more resilient economies.

If concluded, the merger would see National Express chair Sir John Armitt step down to be replaced by Stagecoach chairman Ray O’Toole, a former chief operating officer at National Express.

Reporting a first-half operating profit of £54 million in July despite Covid restrictions, National Express group chief executive Ignacio Garat said: “We are completing work on the business review and it is clear that we have significant profitable growth opportunities ahead.”

National Express has a market value of £1.36 billion and Stagecoach £375 million.

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