Stagecoach ditches National Express merger for £595m takeover

Transport group Stagecoach has ditched its backing of a £1.9bn merger with National Express and agreed to a higher rival £595m takeover.

The firm is recommending an acquisition by investor DWS Infrastructure for 105p a share in cash.

It has withdrawn support for the National Express bid, which valued Stagecoach at around £437m.

It would allow Stagecoach's headquarters to remain in Perth, where it has been based since 1980.

Fears had been raised locally over the prospect of Stagecoach's headquarters moving to Birmingham, after the city lost 222 jobs with the closure of OVO Energy's Perth office.

Stagecoach said the DWS bid offered greater certainty for investors and employees.

It said the number of people working in frontline roles was expected to stay the same and Stagecoach's existing headquarters could be retained.

The National Express and Stagecoach tie-up - which was agreed in December - is being investigated by the Competition and Markets Authority (CMA).

It served a so-called initial enforcement order in January stopping the firms from combining operations or selling any UK businesses while it investigated the deal.

Martin Griffiths, Stagecoach chief executive, said the offer would open a "new and exciting chapter" for the company.

He said: "The proposed offer presents a major opportunity to maximise the significant growth potential ahead."

The DWS offer marks a 37% premium to Stagecoach's closing share price of 76.55p on Tuesday.

It also significantly tops the National Express offer, which was worth just over 69.34p a share.

The offer from National Express would have given Stagecoach's shareholders a 25% stake in the enlarged £1.9bn business.

DWS already has a number of long-term infrastructure investments in the UK, such as Yorkshire Water owner Kelda and Peel Ports.