STAGECOACH and the City both reacted with disappointment yesterday after National Express snubbed its transport rivals' all-share bid approach.
However, Perth-based Stagecoach reserved the right for another takeover tilt at National, which has nearly £1 billion of debt, if a third party made an offer or it could secure the recommendation of the target's board.
National had said it was unl
ikely that a tie-up with the Brian Souter-led Stagecoach would happen this year, even if suitable terms could be agreed, and it was pressing ahead with its stock market fundraising plans.
But National's shares slumped 12 per cent as investors digested the latest failed deal after the Spanish Cosmen family/CVC consortium walked away from a takeover of the group earlier this month.
Stagecoach said in a Stock Exchange statement it believed that there was "a compelling strategic and financial proposition for a combination".
It said benefits for National would have included repairing the firm's relationship with the Department of Transport, which was damaged when it pulled out of its loss-making East Coast Main Line franchise between Edinburgh and London King's Cross.
Stagecoach said repairing that relationship would remove "a major area of uncertainty for National Express shareholders in relation to its existing rail franchises". There has been speculation the government would seek to penalise National for the East Coast debacle by taking away its profitable East Anglia and c2c commuter rail franchises.
National Express said in its statement that its talks with Stagecoach had ceased "to avoid any further disruption to the business and to allow the group to secure the additional equity funding it requires before the end of 2009".
Stagecoach shares edged ahead 1.8p to 146.7p.
