National Express board seals deal with activist shareholder

A potential bust-up at National Express's annual meeting today looks to have been avoided after an 11th-hour deal between the board of the bus and train operator and its activist investor, the US hedge fund Elliott.

Elliott, which owns 18 per cent of the British company, had wanted to appoint three of its own directors and force National Express to adopt a more aggressive tack, including expansion in the US and possibly putting itself up for sale.

Elliott is now thought to have agreed that only one director, Chris Muntwyler, be appointed – possibly because a number of institutions recently came out in support of the National Express board. Legal & General and an influential proxy voting specialist, ISS Governance Services, have both backed the existing management.

Elliott lost a boardroom battle with Swiss biotechnology company Actelion last week, and analysts suggest it did not to want to risk a second public defeat in the space of a week. As part of the agreement, the hedge fund has agreed not to challenge the National Express board in public over the next year. The transport group, for its part, agreed to meet Elliott on a regular basis and set financial performance targets. National Express declined to comment last night.

A vote could have been close as there is still no clear indication of how National Express's second-largest shareholder, the Cosmen family, intended to vote. The Spanish family own 17.4 per cent and are reportedly keen for National Express to merge with another company.

They mounted a failed takeover bid for National Express in 2009 after the firm slumped into financial crisis and was stripped of its East Coast rail franchise. Since then, under the stewardship of ex-Transport for London boss Dean Finch, its performance has improved, but it was not asked to re-tender for another franchise covering East Anglia.

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