Stagecoach and National Express are in merger talks. The new combined group would operate one third of Britain’s buses outside of London

 

 
Stagecoach is synonymous with Britain’s privatised public transport sector. But with that industry now evolving into one where the public sector will play a much greater role, the group looks set to exit the stage.

Who approached whom is not known, but Stagecoach and National Express Group revealed last week that they were in merger talks. The deal that is proposed seems more like a takeover by NEG, with Stagecoach shareholders receiving a 25% stake in the new combined group. The ‘Big Five’ groups that have dominated the UK’s public transport sector since the 1990s could soon become the ‘Big Four’.

This reflects the fact that NEG is a significantly larger group, with Stagecoach having disposed of its large bus operations in North America and exited the UK rail sector. NEG, which has large operations in North America and Spain, currently has a market capitalisation of £1.55bn compared to Stagecoach’s £488m.

It is envisaged that Stagecoach chairman Ray O’Toole will become chairman of the combined group. He served 10 years as group chief operating officer and UK chief executive at NEG before leaving in 2010.NEG chief executive Jose Ignacio Garat and chief financial officer Chris Davies will retain their roles in the combined group.

Stagecoach remains Britain’s largest bus and coach operator, with around 26% of the bus market outside London

Stagecoach remains Britain’s largest bus and coach operator, with around 26% of the bus market outside London (NEG has 7%) and NEG has identified annual savings of £35m as well as opportunities to grow.

The two groups say that a major benefit of their merger would be the ability to maintain NEG’s express coaches at Stagecoach’s network of depots. They also see an opportunity to use Stagecoach to develop NEG’s private hire coach, corporate shuttle and accessible transport businesses.

NEG has until October 19 to announce a firm intention to make an offer for its UK rival.

 
This article appears in the latest issue of Passenger Transport.

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