Nat Express rejects bid from rival FirstGroup

THE BOARD of coach and train operator National Express, which recently renegotiated restrictions on its &pound;1.2bn debt pile, has rejected an unsolicited takeover bid from larger rival FirstGroup.<br /><br />Ahead of a Wednesday trading update which is expected to disappoint investors, it has emerged National Express is now being circled by potential buyers.<br /><br />And talks with the Department for Transport (DfT) over the group&rsquo;s east coast main line are understood to have collapsed.<br /><br />National Express, which is set to make heavy losses from its acquisition of the line, has been under pressure from shareholders to reach a payment agreement with the DfT.<br /><br />Collins Stewart analyst Andrew Fitchie has said the east coast contract will lose the group &pound;90m over the next two years as payments to the DfT go up from &pound;85m to &pound;133m &ndash; hitting &pound;395m by 2015.<br /><br />The company is understood to be considering a &pound;400m rights issue to help fund the project, and to prevent a breach over its payback deal with the DfT.<br /><br />But shareholders are unlikely to back a cash call without some form of concessions from the government.