David Prosser: Green light for FirstGroup

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The Independent Online

Outlook You wait for one disaster to hit National Express and then three arrive all at one. No wonder its shares fell so sharply yesterday: stripped of a major rail franchise, a less-than-happy trading update and the loss of a chief executive; all in a day's work for the transport company everyone loves to hate.

Still, maybe investors should not have been so hasty. The events of yesterday surely make it much more likely that FirstGroup, whose approach to National Express on Monday was rejected out of hand, will return to the negotiating table with a hostile offer – or that National Express's shareholders will press their board to at least talk to its rival.

From FirstGroup's perspective, yesterday couldn't have worked out much better. National Express simultaneously shed its biggest liability, the East Coast main line, and a major opponent to a takeover, chief executive Richard Bowker. Plus the company may lose its other rail franchises, so any acquirer would get exposure to much less difficult operations.

The only downside is that FirstGroup's opportunism will have alerted other predators to the merits of National Express. There'll be plenty more interest now, so FirstGroup would be wise to move quickly.

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