National Express wins support in Elliott battle

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The Independent Online

National Express, the coach and train operator, received a boost yesterday after three major corporate governance groups came out in support of the board in its battle with Elliott Advisors, the activist hedge fund, over motions it has tabled for next month's annual meeting.

Pirc, ISS Governance Services and Glass Lewis have all urged investors to vote against the appointment of Elliott Advisors' choice of three new non-executives, as well as casting their ballot in favour of the two National Express directors seeking re-election at the AGM on 10 May.

Elliott, which holds 18 per cent of the rail operator's shares, outlined on 15 April at least three strategic options to drive shareholder returns by at least 25 per cent at National Express.

The hedge fund wants the transport group to invest in its US business, to carry out a "transformational, synergistic merger", and to conduct a "strategic sale" of assets that, combined, will raise more than the present value of National Express's shares.

National Express "fundamentally disagrees" with these options and yesterday issued statements by the corporate governance firms.

ISS said: "There is a consensus that the turnaround led by chief executive Dean Finch has been a success." Pirc said the recent changes on the rail operator's board of chief executive, finance director and chairman indicated National Express's "willingness to make governance changes".

Glass Lewis added: "We believe that Elliott has failed to provide shareholders with compelling reason to forgo a thus-far successful reorganisation in favour of transactions that would dramatically alter National Express going forward."

Still, Elliott expects to gain the support of the Cosmen family and its nominees, which account for 17.4 per cent of National Express's shares. The fund said that National Express faces "steep challenges" to its UK businesses, partly due toliberalisation and consolidation in the European market.