City & Corporate: In the news ... National Express

Bring us up to speed

Public transport giant Stagecoach is looking to acquire rival National Express after the collapse of a £765m private equity bid at the end of last week. The bid from Spain's Cosmen family, which has an 18 per cent stake in National Express, and private equity firm CVC fell apart and sent National Express' shares tumbling 26 per cent on Friday. Stagecoach has reportedly sent a letter to National Express seeking support for a £1.7bn merger. Any deal may be derailed by National Express' near-£1bn borrowings and the firm is thought to be readying an emergency £350m rights issue.

The reaction?

National Express confirmed it had received a 'highly preliminary' offer from Stagecoach, but The Sunday Telegraph said it was 'cool' on the offer and would press on with its rights issue. Stagecoach said it had been 'invited' to submit a proposal. Under takeover rules Stagecoach can only press ahead with a deal with National Express' agreement. The Telegraph also noted FirstGroup, under similar Takeover Panel restrictions, may consider a bid.

Who are the key PR players?

Nicole Lander is National Express' director of communications and the firm uses Maitland for its financial PR. Stagecoach uses Smithfield.

What happens next?

A rights issue now looks inevitable, but the firm remains an obvious takeover target. Under the Cosmen family plan Stagecoach would have bought National Express' UK operations and the Takeover Panel is expected to review developments to see whether Stagecoach has breached any rules. Neither Stagecoach nor FirstGroup can go ahead with a hostile bid following their withdrawal from merger talks with National Express this year. National Express' interim results are announced this week.

£1bn - National Express' debt load after its acquisition spree.

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