National Express snubs improved offer

PUBLIC transport group National Express today rejected a near-�700million takeover offer, saying that it “undervalued the group and its prospects”.

PUBLIC transport group National Express today rejected a near-�700million takeover offer, saying that it “undervalued the group and its prospects”.

The improved 450p per share offer from a consortium involving the Spanish-based Cosmen family - the group's biggest shareholder - and buy-out specialist CVC valued the group at around �688.5million, representing a 63% premium above the group's share price before it became a takeover target.

But the National Express board said that it believed there was a “compelling investment case” for pursuing an independent future for the group, and that leading institutional shareholders agreed.

It also confirmed that it was considering a range of options to accelerate the reduction of its borrowings, including discussions with investors over potential equity funding raising.

Executive chairman John Devaney said: “We have consulted with our leading institutional shareholders and given full consideration to the consortium's proposal, and the independent board has now rejected their offer - we believe it fundamentally undervalues National Express and its future potential. We believe that we can create more value for shareholders by remaining independent and refinancing the group.

“The Group has a strong portfolio of businesses which continue to perform well in a tough environment. We have a clear strategy to strengthen the balance sheet through an equity issue and other actions which will accelerate our debt reduction process and help fund future growth.

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“We will continue to manage our costs tightly and generate cash, whilst continuing to deliver a high quality service for customers.”

National Express has suffered a torrid time in recent weeks, since announcing last month that it planned to walk away from its loss-making East Coast rail franchise, with its committed funding expected to run out before the end of the year.

The Department for Transport, with which the group had attempted to negotiate a reduction in premiums payable to the Government under the East Coast deal, responded with a threat to strip National Express of its two other rail franchises - regional operator National Express East Anglia and south Essex commuter route c3c.

The group has also posted interim pre-tax losses of �48.1 million against profits of �52.4 million a year earlier as it set aside a hefty sum to cover its exit from the East Coast franchise while the East Anglia operation was crippled by strike action earlier this month.

The Cosmen/CVC offer is dependent on East Anglia and c2c rail franchises, which remain profitable, being retained by National Express.

The Cosmen family first took a stake in National Express in 2005 when the group acquired their Spanish coach and bus business Alsa and have since increased it to 18.5%.

Jorge Cosmen is now deputy chairman of National Express but is playing no part in the board's discussions in relation to the offer, or alternative strategies.