National Express has confirmed reports that it is looking into a possible takeover of its fellow transport heavyweight Stagecoach.
The British bus operator has started discussions around buying out its Scottish rival, the UK’s largest bus operator.
Stagecoach shares rose by almost 90 per cent over the last year, reaching a market value of around £375m, while National Express is valued at around £1.4bn.
A merger between the two of biggest bus operators in the UK could reduce costs for both parties, with the benefit of shared bus depots, routes and administrative roles, Bloomberg reported.
However, National Express said that it expects “one-off” costs of around £40m to put these benefits into practice, which will mostly be “split equally” by the pair in the first two years of the potential merger.
Under the potential agreement, Stagecoach shareholders would receive 0.36 new National Express shares for each Stagecoach share – meaning they would own around 25 per cent of the combined group.
Stagecoach, based in Perth, runs more than 8,000 buses and coaches – including the popular budget Megabus service – across 100 towns and cities in the UK, which could act as a real asset to National Express.