Will Stagecoach save National Express?
The potential Stagecoach and National Express merger took an unexpected turn this morning with news that Stagecoach effectively ruled itself out of a bid in September and is, under takeover and merger rules, unable to make an offer for the company for six months. The only potential route around this restriction is if Stagecoach is invited by the management of National Express to put together some form of merger or takeover.
While it is well-known that Stagecoach has been considering a potential merger for some days, it is unclear as to whether the board of National Express has invited Stagecoach into talks or whether Stagecoach has in fact instigated communications. We may well see the takeover panel become involved in the short to medium term if any rules or regulations have been broken and this could have dire consequences for National Express shareholders if Stagecoach is in fact barred from bidding until March 2010.
This is just another controversial U-turn in the history of National Express, which has seen trading deteriorate over the last few months and an increase in company debt. There has been talk of a potential rights issue to raise significant funds to pay down the debt but whether shareholders will support a rights issue remains to be seen.
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