In a surprise move, bus and tram operator Stagecoach (SGC) has ditched its proposed merger with rival National Express (NEX).
Instead the firm has recommended a 105p per share takeover offer from Inframobility UK, part of private infrastructure group DWS.
Shares in Stagecoach leapt 36% to 104p while National Express shares rallied 8% to 208p.
BIG PREMIUM
The DWS proposal represents a premium of 37% to last night’s close and a 54% premium to the close on 20 September last year, the day before National Express announced its approach.
On a ‘look-through’ basis, taking into account the value of Stagecoach shares under the terms of the National Express deal, the offer represents a 51% premium.
DWS, which owns strategic assets such as Kelda, the owner of Yorkshire Water, and Peel Ports, says its offer provides ‘greater certainty over the future’ for employees and shareholders.
As well as retaining Stagecoach’s senior management, the private firm says the overall headcount in frontline operational roles will remain the same.
For investors, allying with DWS will provide Stagecoach with access to capital to invest in its operations and support team in delivering its business plan, including the transition to net zero.
MARKET OPPORTUNITY
DWS describes itself as ‘a patient long-term infrastructure investor with a proven track record and extensive expertise in unlocking the value of its portfolio companies using its experience, network and ability to deploy further capital in return enhancing investments’.
It also says it has ‘a strong conviction about the UK bus market opportunity on the back of the introduction of Enhanced Partnerships and potential franchising arrangements expected to drive increases in bus patronage and improvements in the quality of the service of the network’.
Meanwhile, snubbed suitor National Express advised Stagecoach shareholders to take no action in respect of the DWS offer and said it would make an announcement of its own ‘in due course’.
Major investors in Stagecoach include Columbia Threadneedle Investments with a 17% stake and non-executive director Brian Souter who owns 14.5% of the shares.
