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Competition watchdog intervenes in National Express and Stagecoach merger

A Stagecoach bus.
A Stagecoach bus.

The £1.9 billion merger between National Express and Stagecoach is being investigated by the UK’s competition watchdog.

The Competition and Markets Authority (CMA) has served a so-called initial enforcement order. This prevents the transport firms from fully combining or offloading businesses while it probes the deal.

The move stops the firms from selling off any UK assets.

Perth-based 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 Limited.

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”.

Fears for Stagecoach jobs in Perth

The two companies agreed an all-share merger last month in a deal that will create a combined group worth about £1.9 bn 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% of the combined group and Stagecoach shareholders around 25%.

The combined group’s headquarters is likely to be National Express’s current head office in Birmingham.

It would bring an end to more than 40 years of Stagecoach being run from Perth, since it was founded by siblings Sir Brian Souter and Dame Ann Gloag.

Sir Brian Souter, Stagecoach co-founder.
Sir Brian Souter, Stagecoach co-founder.

The deal, which will be voted on by shareholders, valued Stagecoach at around £437 million.

Stagecoach merger expected by end of 2022

With regulatory scrutiny looming and in a bid to appease any competition concerns, Stagecoach previously announced deals to offload the marketing, retail and customer service operations of Megabus UK and the South West Falcon coach service.

It also announced a deal for its 35% stake in the Scottish Citylink Coaches joint venture.

A Stagecoach spokesperson said: “We do not expect the initial enforcement order to materially affect the day-to-day operations of either National Express or Stagecoach.

“The parties will continue to work with the CMA in relation to its review of the combination.

“At this stage, the boards continue to expect the combination to complete around the end of 2022.”

Firms hit hard by slump in passengers

Passenger numbers have fallen sharply due to lockdowns, remote working and a switch away from public transport.

Paul Davies, Alexander Dennis; Martin Griffiths, Stagecoach chief executive; former transport minister Graeme Dey and Sam Greer, Stagecoach regional director.
Stagecoach electric bus investment in Perth. Paul Davies, Alexander Dennis; Martin Griffiths, Stagecoach chief executive; former transport minister Graeme Dey and Sam Greer, Stagecoach regional director.

Government support to help transport firms through the crisis is also due to end soon.

It follows a previous attempt at a merger in 2009. Then, National Express rejected a £1.7 billion deal mooted by Stagecoach.

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

Stagecoach is Britain’s biggest bus and coach operator.

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