Stagecoach and National Express marriage on hold as watchdog launches probe
The near-£2 billion merger between Perth-based Stagecoach and rival National Express is being probed by the competition watchdog in a move that stops the firms from selling off any UK assets.
The Competition and Markets Authority (CMA) said it has served a so-called initial enforcement order, which prevents the transport giants from fully combining or offloading businesses while it investigates the bumper deal.
Stagecoach said the move will delay the planned sale of the marketing, retail and customer service operations of its inter-city coach businesses to ComfortDelGro Corporation.
But it said the merger partners continue to believe the sell-off will be a “comprehensive solution to any competition concerns that might arise from their overlapping coach operations”.
It said the firms “will engage with the CMA to allow the Stagecoach coach disposal to complete as soon as possible”.
Last month’s deal, which was struck after talks between the pair were revealed in September, is set to create a combined business worth some £1.9bn with a fleet of about 40,000 vehicles and a workforce of 70,000 people.
Under the terms of the tie-up, National Express shareholders would own around 75 per cent of the combined group and Perth-headquartered Stagecoach shareholders the remaining 25 per cent or so.
The deal, which has still to be voted on by shareholders, valued Stagecoach at some £437 million.
About 50 roles are expected to be cut under plans to slash annual costs by at least £45m following the merger.
Those jobs are set to go across the head offices, IT and corporate departments of the two businesses, as well as some overlapping senior management positions.
But the companies stressed last month that there would be no front-line job losses, such as among drivers, or depot closures due to the tie-up.
With the prospect of regulatory scrutiny looming large and in a bid to appease any competition concerns, Stagecoach announced deals to offload the marketing, retail and customer service operations of Megabus UK and the South West Falcon coach service, as well as its 35 per cent stake in the Scottish Citylink Coaches joint venture.
Stagecoach said: “We do not expect the IEO (initial enforcement order) to materially affect the day-to-day operations of either National Express or Stagecoach, and the parties will continue to work with the CMA in relation to its review of the combination.
“At this stage, the boards of National Express and Stagecoach continue to expect the combination to complete around the end of 2022.”
The planned deal follows a previous attempt at a merger in 2009, when National Express rejected a £1.7bn merger deal mooted by Stagecoach.
The former attempt at a marriage between the two would have seen Stagecoach own the majority of the combined group, with National Express left with up to 40 per cent.
Stagecoach, which was founded in 1980 by Sir Brian Souter and his sister Dame Ann Gloag, is UK-focused and is Britain’s biggest bus and coach operator.
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.