Stagecoach Western Buses Alexander Dennis Enviro 300
National Stagecoach Express?
National Express has confirmed that it is considering making an offer to buy Stagecoach. If completed, the deal will deliver “significant operational efficiencies across the combined networks” and accelerate the expansion of National Express’s key growth sectors, including into the corporate, shuttle and private hire coach market, it says. Combination of the two groups would also position the resulting business well in an evolving bus industry landscape.
Under the terms of possible all-share combination, Stagecoach shareholders would receive 0.36 new National Express ordinary shares for each Stagecoach ordinary share. That would result in them owning approximately 25% of the combined group.
National Express has until 19 October to either announce a firm intention to make an offer for Stagecoach or to withdraw, although that deadline can be extended. Any deal would be subject to regulatory and merger control approval.
In a statement, National Express says that combining the two businesses would, among other things, accelerate the expansion of its National Express Transport Solutions (NETS) business, along with its accessible transport operation, “across Stagecoach’s UK footprint.” NETS was launched in July 2020 with a bullish message that it would “stand apart from the rest of the market.”
In addition to delivering growth potential via NETS and in the accessible sector, National Express says that the potential combination of the two businesses would enable its scheduled coach operation to improve efficiencies through use of Stagecoach’s depot network for operations and vehicle maintenance.
National Express believes that if the deal is completed, 25% of expected cost synergies would be achieved by the end of the first year, 85% by the end of the second year and the full pre-tax run rate of at least £35m by the end of the third year.
Those savings would be split approximately equally across network efficiencies and optimisation; shared operational best practice; and through additional savings such as rationalisation of shared costs and the non-depot footprint.
Should the deal be completed, it is envisaged that Ray O’Toole would become Chair of the combined group. Current Chair of National Express Sir John Armitt would step down. Jorge Cosmen would be Deputy Chair of the combined group while National Express’s present Chief Executive Ignacio Garat would hold the same position in the combined business, with Chris Davies as Chief Financial Officer.
The purchase would be something of a role reversal as back in 2008, Stagecoach had looked seriously at purchasing National Express as that company went through its own issues following it’s ill-advised venture in to running the East Coast main line rail service. NatEx massively overbid for it and had to hand it back, something Stagecoach actually did subsequently itself in later years when it too put in a bid which was also over-optimistic. However what Stagecoach was interested at the time of its approach to buy NatEx was NatEx’s bus businesses, particularly in the West Midlands.
That bid fell through and NatEx eventually steadied itself and rebuilt its business, although it had to hand back other rail businesses it owned as result of its East Coast escapades and as a punishment for them. It’s expanded into continental Europe and particularly in America where it the second largest private operator of Student, Transit and Paratransit operations in the USA. It also runs rail operations in Germany.
Stagecoach meanwhile has contracted. It’s sold off it’s US Coach USA and transit operations in 2018 and now its only presence is the Megabus brand, which operates in Canada and America. It no longer runs rail operations in the UK, having been barred due to concerns over tendering issues by the authorities. It’s now only a UK operator and so doesn’t have any real overseas operations.
However Stagecoach’s UK bus operations massively dwarf NatEx’s bus operations. Ironically, if the deal goes through it would take the new business back into Dundee through Stagecoach East Scotland, NatEx having sold off its former Xplore Dundee brand there to McGill’s. There’s no longer any bus operations north of the border run by NatEx although there are some coach services run by NatEx to the major cities in Scotland from destinations down south. Stagecoach is Scotland’s largest bus operator and indeed headquartered in Scotland. It’s operations in Scotland include 27221 (SK15HCC), run by Stagecoach Western Buses.
The only potential issues to the purchase are some overlap in the bus business in the Midlands and the coach operations. Stagecoach’s Megabus is NatEx’s own coach business’s major competition and the competition authorities may have something to say about all the coaches being in one company’s control. However with FLiXBUS entering the UK market, a case could be argued that this is a defensive move by both businesses and possibly an argument to allow the purchase. So we’ll see what happens. At the moment it’s just talks but interesting times ahead.
Stagecoach Western Buses Alexander Dennis Enviro 300
National Stagecoach Express?
National Express has confirmed that it is considering making an offer to buy Stagecoach. If completed, the deal will deliver “significant operational efficiencies across the combined networks” and accelerate the expansion of National Express’s key growth sectors, including into the corporate, shuttle and private hire coach market, it says. Combination of the two groups would also position the resulting business well in an evolving bus industry landscape.
Under the terms of possible all-share combination, Stagecoach shareholders would receive 0.36 new National Express ordinary shares for each Stagecoach ordinary share. That would result in them owning approximately 25% of the combined group.
National Express has until 19 October to either announce a firm intention to make an offer for Stagecoach or to withdraw, although that deadline can be extended. Any deal would be subject to regulatory and merger control approval.
In a statement, National Express says that combining the two businesses would, among other things, accelerate the expansion of its National Express Transport Solutions (NETS) business, along with its accessible transport operation, “across Stagecoach’s UK footprint.” NETS was launched in July 2020 with a bullish message that it would “stand apart from the rest of the market.”
In addition to delivering growth potential via NETS and in the accessible sector, National Express says that the potential combination of the two businesses would enable its scheduled coach operation to improve efficiencies through use of Stagecoach’s depot network for operations and vehicle maintenance.
National Express believes that if the deal is completed, 25% of expected cost synergies would be achieved by the end of the first year, 85% by the end of the second year and the full pre-tax run rate of at least £35m by the end of the third year.
Those savings would be split approximately equally across network efficiencies and optimisation; shared operational best practice; and through additional savings such as rationalisation of shared costs and the non-depot footprint.
Should the deal be completed, it is envisaged that Ray O’Toole would become Chair of the combined group. Current Chair of National Express Sir John Armitt would step down. Jorge Cosmen would be Deputy Chair of the combined group while National Express’s present Chief Executive Ignacio Garat would hold the same position in the combined business, with Chris Davies as Chief Financial Officer.
The purchase would be something of a role reversal as back in 2008, Stagecoach had looked seriously at purchasing National Express as that company went through its own issues following it’s ill-advised venture in to running the East Coast main line rail service. NatEx massively overbid for it and had to hand it back, something Stagecoach actually did subsequently itself in later years when it too put in a bid which was also over-optimistic. However what Stagecoach was interested at the time of its approach to buy NatEx was NatEx’s bus businesses, particularly in the West Midlands.
That bid fell through and NatEx eventually steadied itself and rebuilt its business, although it had to hand back other rail businesses it owned as result of its East Coast escapades and as a punishment for them. It’s expanded into continental Europe and particularly in America where it the second largest private operator of Student, Transit and Paratransit operations in the USA. It also runs rail operations in Germany.
Stagecoach meanwhile has contracted. It’s sold off it’s US Coach USA and transit operations in 2018 and now its only presence is the Megabus brand, which operates in Canada and America. It no longer runs rail operations in the UK, having been barred due to concerns over tendering issues by the authorities. It’s now only a UK operator and so doesn’t have any real overseas operations.
However Stagecoach’s UK bus operations massively dwarf NatEx’s bus operations. Ironically, if the deal goes through it would take the new business back into Dundee through Stagecoach East Scotland, NatEx having sold off its former Xplore Dundee brand there to McGill’s. There’s no longer any bus operations north of the border run by NatEx although there are some coach services run by NatEx to the major cities in Scotland from destinations down south. Stagecoach is Scotland’s largest bus operator and indeed headquartered in Scotland. It’s operations in Scotland include 27221 (SK15HCC), run by Stagecoach Western Buses.
The only potential issues to the purchase are some overlap in the bus business in the Midlands and the coach operations. Stagecoach’s Megabus is NatEx’s own coach business’s major competition and the competition authorities may have something to say about all the coaches being in one company’s control. However with FLiXBUS entering the UK market, a case could be argued that this is a defensive move by both businesses and possibly an argument to allow the purchase. So we’ll see what happens. At the moment it’s just talks but interesting times ahead.