Stagecoach, the Scottish transport group, confirmed yesterday that it was in talks with the consortium bidding for its beleaguered rival National Express about buying parts of the business in the event of a successful takeover. Stagecoach has not ruled out a bid for the whole company.
The consortium includes the buyout specialist CVC Capital Partners, and Spain's Cosmen family, which is also the largest shareholder in National Express. They are hoping to make a cash offer for the rail and coach operator, subject to a number of conditions.
On Friday, the consortium said it had made an indicative offer for National Expresss after First Group bowed out of the bidding following a "put up or shut up" deadline. The Cosmen family has an 18.5 per cent holding in National Express and Jorge Cosmen is deputy chairman of the group. The Cosmens sold their Spanish bus company, Alsa, to National Express in 2005 for £149m and 10 per cent of the shares.
National Express has £1.2bn of debt, and with recession-hit Britons either not travelling or shopping around for lower fares, its covenants are under threat. The group is pulling out of the £1.4bn East Coast Main Line franchise because it can no longer afford to support it, and the Government is taking the rail line back into public ownership. Meanwhile, National Express's chief executive, Richard Bowker, is resigning to take the top job at Union Railway in the United Arab Emirates.
Britain's rail franchise system is under increasing pressure. MPs on the Commons transport committee called for a rethink yesterday, and the RMT union, which will stage the first of four 48-hour strikes on the East Anglia network on Thursday, says the system is "a mess". Bob Crow, the RMT's general-secretary, said: "The suggestion of a Stagecoach takeover bid for National Express shows the big players are still playing with rail franchises like they are some giant game of corporate pass the parcel."