National Express denies inviting Stagecoach proposal

19th Oct 2009 07:20

National Express has denied inviting rival bus and train group Stagecoach to make a proposal to merge the two groups, though it did confirm it is considering an all share deal.Stagecoach, which confirmed it had made a merger proposal, had suggested in a stock exchange announcement it was at the invitation of National Express. Stagecoach, which was a part of the CVC/Cosmen family consortium that dropped its bid for National Express last Friday, had stated in September it would not make a hostile bid. As a result it can only bid again in certain circumstances and with the agreement of the National Express board until six months has passed.The merger proposal would see Stagecoach owning 60% of the enlarged company and existing National Express shareholders 40%, though the precise exchange ratio, the extent to which any equity needs to be issued for cash and appropriate disposals of businesses are still under review today's statement said. National Express added that it has not received any proposal from FirstGroup, which pulled out of a proposed takeover in July. Shares in National Express slumped by a quarter on Friday after the CVC consortium walked away. The train added to fall in the shares as it said it is planning a sizeable rights issue to help reduce its £1bn debt pile.National Express gave up the East Coast Mainline rail franchise earlier this year after the government refused to allow it to renegotiate the terms. Reports today suggested a rights issue could raise an estimated £300m.