Transport operator National Express confirmed on Tuesday that it is in talks with rival Stagecoach about a possible merger.
Under the terms of the potential combination, Stagecoach shareholders would receive 0.36 new National Express ordinary shares for each of their ordinary shares, resulting in them owning around 25% of the combined group.
“The board of National Express and Stagecoach believe that the potential combination would be a strategically compelling proposition with significant growth and cost synergies, as well as delivering strong value creation for both sets of shareholders,” it said.
National Express said it has identified pre-tax cost synergies that are expected to reach a run-rate of at least £35m, with around 25% achieved by the end of the first year, 85% by the end of the second year and full run rate by the end of the third year following completion of the deal.
The company said discussions between the parties and reciprocal customary due diligence remain ongoing and there can be no certainty an offer will be made.
