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Stagecoach agree to extend takeover talks into November

National Express and Stagecoach have agreed to extend their merger negotiations into next month.

The deal would value Stagecoach at £445m and would lead to the creation of a £1.85bn enlarged group but it is now being delayed until at least November 16.

The talks to combine the two largest public transport providers in the UK were announced in late September.

The companies said: “Discussions between the parties and reciprocal due diligence remain ongoing and there can be no certainty that an offer will be made.”

Following confirmation of the delay, shares in Perth headquartered Stagecoach fell by 3.2% while National Express shares were down by 3.4%.

Under the terms of the possible all-share tie-up, National Express would own around 75% of the combined group and Stagecoach shareholders around 25%.

It comes after both companies have been hit hard by the pandemic, with passenger numbers slumping due to lockdowns, remote working and a switch away from public transport.

They have outlined plans to slash costs as part of the potential merger, with National Express stating it expects to find annual savings of at least £35m, with around 25% by the end of the first year.

If the talks lead to a deal, the combined group would see Stagecoach chairman Ray O’Toole become chairman of the board.

National Express boss Ignacio Garat would be chief executive of the enlarged group.

National Express has bus and coach networks across the UK and Spain, while it also runs school bus services in America and a rail franchise in Germany.

Stagecoach is more UK focused and is Britain’s biggest bus and coach operator.

National Express said the deal would allow it to use Stagecoach’s depot network to run and maintain its coach operations, while also allowing it to expand its new growth initiatives – such as private coach hire, corporate shuttle and accessible transport – across Stagecoach’s UK operations.

The talks come after National Express rejected a £1.7bn merger deal first mooted by Stagecoach in 2009.

This former attempt at a merger between the two would have seen Stagecoach own the majority of the combined group, with National Express left with up to 40%.

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