National Express has urged Stagecoach shareholders to back its merger offer over a rival takeover bid from DWS, which the board said ‘materially undervalues’ the firm.
Last week National Express’s £470million bid was gatecrashed by the German investment firm, which offered £595million.
Stagecoach had agreed to the National Express all-share offer in December, but made a U-turn and instead backed the 105p a share bid from DWS.
Takeover battle: National Express said its proposed merger represented ‘a superior value creation opportunity’ when compared to the offer from DWS
Today, National Express said its proposed merger, which would create a £1.9billion transport group, represented ‘a superior value creation opportunity’ when compared to the offer from the German fund manager.
National Express added that its current share price of 232p ‘already implies an illustrative look-through value per Stagecoach share’ of 105p – the figure DWS is offering.
It urged Stagecoach shareholders to ‘look through the current period of market volatility’ and value the companies on their fundamentals and ‘strong future prospects’.
The coach operator said that analysts consensus for National Express shares to rise to 330p implied an ‘illustrative look-through value’ per Stagecoach share of approximately 140 pence – which represented a 35 per cent premium to the DWS offer.
It added that a price recovery to pre-pandemic levels of 421p implied ‘an illustrative look-through value’ per Stagecoach share of around 170p, which represented a 66 per cent premium to the DWS offer.
‘The National Express Board therefore believes the Combination represents a superior value creation opportunity when compared to the 105 pence per share DWS Offer,’ it said in a statement today.
The FTSE 250 firm also stressed that their merger was not expected to result in any job losses in ‘front-line operational roles’ or depot closures ‘given the minimal direct operational overlap of the two businesses’.
It added that their merger would create a ‘leading’ transport provider in the UK and deliver ‘significant efficiencies’, such as National Express Coach utilising Stagecoach’s depot network to run and maintain its coach operations.
National Express shares rose 1.2 per cent to 235p in morning trading, while Stagecoach shares also rose 1.2 per cent to 105.80p.
Last week, National Express reported shrinking annual losses as loosening travel restrictions led to a soaring recovery in public transport usage.
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