National Express Group: Jumping Onboard the Stagecoach?

School bus personnel at the second largest school bus contractor in North America must be feeling schizophrenic. Since June, nearly every morning they prepare for work, they have had serious questions as to whom they'll be reporting to by day's end.

Soon, it may be superiors at Stagecoach Group plc.

With a consortium led by majority stakeholder the Cosmen family of Spain having retracted its interest in National Express Group plc, UK competitor Stagecoach has now stepped up as a sole pursuer of company that holds Durham School Services in the United States and Stock Transportation in Canada after a consortium led by National Express' largest shareholder has walked away from the table.

However, what might happen to the school bus business remains to be seen. In fact, a lot remains to be seen. There's been nary a mention of National Express' lucrative school transportation holdings in North America, which are operated by National Express Corporation. And its employees know little more than what was announced in a company memo issued on Sept. 11 by Brian Stock, president and CEO of National Express Corp., that basically gave employees background information on the Cosmen family, which has 11 generations worth of experience in the transportation business dating back to 1728.

It’s been a long and winding road for the company over the past five months. First, FirstGroup plc, the parent company of First Student, made an informal inquiry into purchasing the business after National Express walked away from a lucrative UK east coast rail contract amid cashflow troubles, its stock plunged and its CEO departed. After FirstGroup said it was no longer interested, Jorge Cosmen, the leader of the Spanish transportation mogul family and the 18.5 percent majority stockholder on the National Express board, joined forces with consulting firm CVC Capital Parnters with the designs of a takeover. Different offers resulted, and even Stagecoach was brought into the fray. And now, Stagecoach is the only company still in the running. But it still remains very much up in the air if National Express will be purchased.

The Cosmens’ consortium announced late last week it was no longer interested in pursuing the deal. In a statement made yesterday, the company said it is still exploring the possibility of raising private capital rather than moving on with a sale, though the board “will carefully consider the Stagecoach Proposal whilst continuing to progress its equity funding plans in order to assess whether the Stagecoach Proposal offers greater value and certainty to NEC shareholders.”

According to Bloomberg News, Stagecoach is offering £1.7 billion, or $2.8 billion. As a result, National Express’ stock price gained 11 percent on the London Stock Exchange. But its share price is still down about 60 percent from highs last October.

‘Agreement of Principles’ Reached on Possible Sale of UK Contractor with North American School Bus Ties

By Ryan Gray

The prospect that UK’s National Express Group, the owner of Durham School Services in the United States and Stock Transportation in Canada, might be acquired by rival Stagecoach Group plc appears more and more likely as the companies reached an understanding on how to move forward with a sale.

Stagecoach last week joined a consortium interested in purchasing all of National Express Group led by Jorge Cosmen, non-executive deputy chairman of National Express and chief representative of Spain’s Cosmen family, the majority shareholder of National Express at 18.5 percent. The family joined private equity firm CVC earlier this summer to bid for a takeover of National Express’ complete portfolio.

Today’s statement by National Express confirming that talks are underway regarding acquisition does not mention its North American operations under the National Express Corporation flag, which includes the second largest contracted school bus fleet in North America behind FirstGroup plc’s FirstGroup North America and First Student, which made its own unofficial bid for National Express in June.

We’re still trying to track down a comment by company representatives here in the states, but in reading National Express’ statement today, it would seem that the Cosmen’s have different designs on the North American school bus business as it only mentions Stagecoach possibly acquiring National Express’ UK bus and rail operations.

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