US investor set to fail in move to force National Express sale

A BID by an aggressive US hedge fund to force National Express's board to put the transport group up for sale, possibly to Scotland's Stagecoach group, looked to have hit the buffers yesterday.

It is understood that Elliott Management, a $17 billion (10.6bn) activist firm and National Express's second biggest investor, has approached Stagecoach and SNCF, the French rail giant, about a potential takeover of the company.

But it is believed both parties have poured cold water on the deal, even though Stagecoach had an all-share bid approach for National rebuffed by the target's board in the autumn of 2009.

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That came just weeks after a consortium of the Spanish Cosmen family and private equity group CVC walked away from a possible takeover of the transport group, which has since slashed debts that at one stage topped 1bn.

The Cosmens are the company's biggest shareholder, with 17 per cent, compared with the 16 per cent owned by Elliott International, the US hedge fund's London-based overseas arm.

It is believed the family, led by Jorge Cosmen, deputy chairman of National Express, is now supportive of the turnaround at the company, spearheaded by new chief executive Dean Finch.

Perth-based Stagecoach is also believed to think time has moved on and that there is not now the same compelling case for a merger with National Express that there was two years ago. Stagecoach declined to comment yesterday.

Paul Hickman, transport analyst at broker Peel Hunt, told The Scotsman: "Finch is doing a pretty good job. There is a lot more credibility around National Express now and that credibility makes it less likely that a deal as apparently envisaged (by Elliott] would get off the ground."

National Express lost its franchise for the East Coast mainline between Edinburgh and London in 2009 for failing to meet its financial commitments to the UK government as passenger numbers fell in the recession.

But in December the company, which also has substantial UK and US bus operations, revealed it had been awarded a two-year extension to May 2013 to run the c2c commuter line by the Department of Transport.

The line between Essex and Fenchurch Street in the heart of the City of London.

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SNCF is also believed to have been cool towards Elliott's approach. Elliott was unavailable for comment yesterday.

One City National Express-watcher said: "I find it odd that Elliott would pursue this idea for National to sell itself when by all accounts the three main potential pivotal players here, National's board, the Cosmen family and Stagecoach, are not interested."

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