National Express gloom as takeover plan stalls

Oct 17 2009 by Iain Laing, The Journal

STRUGGLING transport group National Express saw its shares hammered yesterday after it said talks over a £765m takeover have hit the buffers.

Spain’s Cosmen family, the group’s largest shareholder with 18.5%, had been working on a potential deal with buy-out firm CVC since July. But shares slumped by as much as a third as the would-be buyer withdrew, wiping almost £250m from the value of the company at one stage.

National Express, which is labouring under debts of almost £1bn, has been in the takeover spotlight after its rail business, which includes the East Coast mainline between Edinburgh and London, was hit by recession.

But the company is due to hand back its loss-making East Coast franchise, which it paid too much for at the height of the boom, to the Government by the end of the year.

The Cosmens took their stake in 2005 when National Express entered the Spanish coach and bus market with the acquisition of Alsa, which was owned by the family.

They will instead support plans for National Express to strengthen its debt-laden finances by tapping shareholders for funds.

Panmure Gordon analyst James Cooke said: “National Express is now likely to raise new equity, possibly around £400m, in order to strengthen its stretched balance sheet.”