National Express is to buy Stagecoach in an all-share deal that will bring together two of the UK’s largest public transport operators, as the sector rebuilds from the pandemic.
Stagecoach shareholders will receive 0.36 new National Express shares for each Stagecoach share, handing them about 25 per cent of the combined company. That would value the Perth-based group at about £468m, based on the National Express share price on Tuesday.
Shares in Stagecoach rose 6.8 per cent following the announcement but remain half of the level they were at before the pandemic.
The combined company will be the UK’s largest road transport provider with 40,000 vehicles and a workforce of approximately 70,000 people. The deal combines the UK’s largest coach fleet and extensive international operations of National Express with the operator of more than 25 per cent of the country’s buses.
Ignacio Garat, chief executive of National Express, said that the deal would “create a leading multi-modal passenger transport business in the UK”.
The consolidation of the UK bus and coach sector follows a difficult period for operators after the coronavirus pandemic hit revenues and with the sector facing the end of state aid early next year. Meanwhile, transport providers are increasing their investment in expensive electric and hydrogen buses.
The two companies expect to achieve cost savings of £45m, up from their previous expectations of £35m when the National Express approach was first announced in September.