Elliott proposes sale of National Express assets

National Express’ biggest shareholder has proposed breaking up the company or merging it with a rival as it meets shareholders in London today.

Elliott Advisors, the activist hedge fund that now owns 17.5 per cent of the transport group, said it supported either selling National Express assets to “natural owners” or to allow it to refocus the business on the US market.

A third option would be merging National Express in its entirety with another group with strengths in the UK and US, it said in a detailed presentation directed to investors.

In a sharp warning to the board, Elliott said it was proposing the options “not only to create value but also to avoid any further destruction of value” at the company.

“The markets that National Express operates in are set to become even more competitive, and therefore it is critical that the board considers alternative strategic options to overcome this challenge now,” it said.

It said the group’s assets were worth more separately than as a whole, and gave the first indication that a break-up may involve a sale of Spanish assets to second-largest investor the Cosmen family.

It proposed a scenario where the Spanish bus and north American school bus divisions are sold to financial buyers while the UK bus and coach business was sold to trade buyers such as rival Stagecoach.

“While Spain delivers attractive margins to National Express, it has historically been undervalued by public markets,” it said in the presentation.

Sources close to National Express said it felt the proposals contained nothing new and was concerned the options presented were skewed towards a sale in the near future.

A spokesman said National Express “fundamentally disagrees with Elliott's strategic options which are focused on the short term and would not deliver the same value for shareholders as National Express' existing long-term growth strategy.

“The group is making good progress in its process to appoint additional independent non-executive directors, and believes Elliott's attempts to appoint its own directors contravene good corporate governance.”