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