National Express in merger with Stagecoach

BUS and coach group National Express has agreed an all-share takeover of rival Stagecoach in a deal that will bring together two of the UK’s biggest transport firms.

The deal, which comes after talks between the pair were first revealed in September, will create a combined firm worth around £1.9bn with a fleet of about 40,000 vehicles and a workforce of around 70,000 people.

Under the terms of the tie-up, National Express shareholders would own around 75% of the combined group and Stagecoach shareholders around 25%. The deal, which will be voted on by shareholders, values Stagecoach at around £437m.

The firms revealed that around 50 roles are expected to be cut under plans to slash annual costs by at least £45m following the merger.

The jobs are set to go across the head offices, IT and corporate departments of the two firms, as well as some overlapping senior management positions. But they stressed there would be no front-line job losses, such as among drivers, or depot closures due to the deal.

In a bid to ease any potential regulatory competition concerns, Stagecoach also announced deals to offload the marketing, retail and customer service operations of Megabus UK and the Falcon South-West coach service, as well as its 35% stake in the Scottish Citylink Coaches joint venture.

Stagecoach chairman Ray O’Toole will become chairman of the merged group, while National Express chief executive Ignacio Garat will keep the same role at the merged firm.

The merger comes as both firms have been hit hard by the pandemic, with passenger numbers slumping due to lockdowns, remote working and a switch away from public transport. .Government support to help transport firms through the crisis is also due to end soon.

It follows a previous attempt at a merger in 2009, when National Express rejected a £1.7bn merger deal mooted by Stagecoach.