City A.M. Reporter
British bus and rail operator Stagecoach’s proposed takeover boosted shares in rival National Express but gains were capped by fears that regulatory hurdles and debt deadlines could scupper a deal. <br /><br />Analysts said a tie-up would make a lot of sense for debt-laden National Express and help Stagecoach’s earnings but some suggested National Express might instead have to push ahead with a capital hike given pressure on its balance sheet. <br /><br />National Express said on Sunday that Stagecoach had made a “highly preliminary” approach, proposing an all-share deal in which National Express shareholders would own no more than 40 per cent of the combined group.<br /><br />The new group would have a market value of about £1.7bn, based on Friday’s closing share prices. <br /><br />National Express shares closed the day up 10.5 per cent at 400p. Stagecoach closed marginally up 0.06 per cent at 157p.<br /><br />However, National Express slid over 20 per cent on Friday after a consortium led by Spain’s Cosmen family walked away from a proposed £765m offer that valued the group at 500p per share.<br /><br />Stagecoach’s approach also implied a value of up to 500p a share for National Express said analysts at Collins Stewart while Panmure Gordon put the figure at 490p and Arbuthnot Securities at 480p.<br /><br />“National Express remaining independent looks highly unlikely,” Collins Stewart analyst Andrew Fitchie wrote, pointing to its lack of a chief executive, the need to cut a £1bn debt pile and weakness at its US business.