NatEx rejects Stagecoach merger plans

NATIONAL Express last night ruled out a merger with Stagecoach and said that it was pressing ahead with a fundraising.<br /><br />The transport group said that its board and advisers had decided a merger would not offer greater value and certainty to shareholders.<br /><br />National Express said last week that Stagecoach had made a &ldquo;highly preliminary&rdquo; approach, proposing an all-share deal in which National Express shareholders would own no more than 40 per cent of a combined group.<br /><br />But concerns over regulatory hurdles and debt deadlines ended up scuppering the deal.<br /><br />The group has until 31 December to raise new equity and reduce its debt levels, or risk breaching its covenants. <br /><br />&nbsp;It said in July that its net debt in the six months to 30 June stood at &pound;977m. The group is believed to be looking to raise between &pound;300m and &pound;400m, but further details are expected next month.<br /><br />National Express and its advisers Merrill Lynch and Morgan Stanley are&nbsp; now working flat-out to ensure an &ldquo;equity fundraising be undertaken as soon as possible&rdquo;.<br /><br />The company could not press ahead with a fundraising while Stagecoach was doing due diligence on its books. <br /><br />National Express recently rejected an offer from a consortium made up of private equity house CVC and largest shareholder Cosmen