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Asset manager DWS snatches Stagecoach from National Express for close to £600m

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Bus operator Stagecoach said that revenue on its regional bus services had recovered to up to 60 per cent of pre-pandemic levels.

Asset manager DWS Infrastructure has, through subsidiary PEIF III Bidco, snatched Stagecoach from National Express for £594.9m.

The news has sent Stagecoach’s share soaring 36.64 per cent to 104.60p.

The company has offered 37.2 per cent to Stagecoach’s closing price of 76.55p per share on 8 March, causing Stagecoach’s board to withdraw the National Express recommendation made on 14 December.

“The Stagecoach directors, who have been so advised by Deutsche Bank and RBC as to the financial terms of the offer, consider the terms of the Offer to be fair and reasonable,” said Stagecoach in a statement.

According to Stagecoach, both companies have a shared vision for the future, which will unlock value for stakeholders while providing certainty for the workforce.

The offer is expected to become unconditional in the first half of this year.

“Stagecoach is a leading multi-modal public transport operator and the proposed offer presents a major opportunity to maximise the significant growth potential ahead as governments seek to deliver economic recovery, level up communities, provide better health outcomes for citizens, and transition to a net zero future,” commented Stagecoach’s chief executive Martin Griffiths.

The bus company’s board had previously accepted the £445m takeover offer from transport giant National Express, which proposed in December a merger between the two rivals to create a £1.9bn.

The agreement, which had come after months of talk, would have seen the new company owned 75 per cent by National Express and 25 per cent by Stagecoach, Morning Wire reported.

Commenting on the news, Scandinavian fund SKAGEN Focus – who has a considerable share in Stagecoach – said National Express’s offer undervalued the company’s worth.

“We thought there was a misunderstanding in the market’s perception on the Covid-19 impact on the company’s earnings power, as a large part of revenues were contractually based,” said SKAGEN Focus’s portfolio manager Jonas Edholm.

“We believed the National Express bid (last year) vastly undervalued the company’s assets and earnings normalised earnings generation and have stayed in the position awaiting a potential higher offer, which has now materialised.

“The recent cash offer is just shy of our price target of the equity.”