New twist in battle for rail firm

THE battle to run the company responsible for the east of England's rail services intensified yesterday with news that its biggest shareholder had tabled an improved takeover proposal.

THE battle to run the company responsible for the east of England's rail services intensified yesterday with news that its biggest shareholder had tabled an improved takeover proposal.

National Express - which has had a torrid few months since it announced it was on the verge of walking away from its East Coast mainline franchise - said it was mulling an increased offer from Spain's Cosmen family, which already owns 18.5pc of the company.

The bid, which is worth almost �700m, is not a formal offer. Under Takeover Panel rules, the consortium - which also includes buy-out firm CVC - has until September 11 to make a firm offer or walk away.

The consortium has said it will only make a formal bid if it is given guarantees that it can keep hold of the profitable east of England franchise as well as the C2c London commuter services.


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However, that is not a decision which is in National Express's hands. The fate of those franchises is uncertain after transport secretary Lord Adonis said he was considering stripping National Express of all its UK rail operations if the company walked away from the East Coast service later this year, as it has threatened to do.

The board of National Express, which employs 43,000 people in the UK, North America and Spain and operates coach as well as rail services, said it was weighing up the Cosmen offer, but it added it was also considering a range of other options should a deal not go through. Those options include a possible rights issue as it looks to slash its debts, which are currently �977m.

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“There can be no certainty that the approach by the consortium will lead to an offer being made for National Express or as to the terms on which any offer might be made,” the company said in a brief statement yesterday.

The group rejected an all-share approach from rival operator First Group two months ago. Meanwhile, fellow rival Stagecoach last month said it was in exclusive talks with the Cosmens over the possible purchase of some National Express assets should the consortium's takeover proposals become a reality.

However, Stagecoach added that it was considering “all other options” - raising speculation that it could yet mount its own bid.

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