The board of Perth-based transport giant Stagecoach announced it has agreed to a rival £595 million cash takeover bid from German asset manager DWS that would scupper a deal it agreed in December to be acquired by National Express Group in an all-share transaction worth about £470 million at the time.
The Stagecoach directors said they no longer intend to recommend the National Express offer announced on December 14.
On January 26, the UK’s Competition and Markets Authority (CMA) announced it was investigating the proposed merger between National Express and Stagecoach.
A fund managed by DWS Infrastructure has agreed to pay £1.05 in cash for each Stagecoach share — a premium of 54.3% to the Scottish firm’s closing price of 68.05p on September 20, 2021, the last business day before the National Express possible offer announcement, and a premium of 37.2% to the closing price of 76.55p on March 8, 2022.
DWS said it would retain Stagecoach’s current chief executive Martin Griffiths as well as its finance director and UK Managing Director and “… for employees, it will provide greater certainty over the future, with overall headcount in frontline operational roles expected to remain the same, as well as the retention of Stagecoach‘s existing headquarter functions and related roles in Perth, London and Stockport.”
Stagecoach founders Brian Souter and his sister Ann Gloag announced last April a 10-year plan to reduce their shareholdings in Stagecoach from 27% to 5% — a move that some analysts viewed as paving the way for a takeover.
The DWS deal requires the support of shareholders with 75% of Stagecoach stock.
DWS said Threadneedle Asset Management, Stagecoach’s biggest shareholder with a 16.98% stake, has sent DWS a non-binding letter of intent “confirming that it is their current intention to accept” the DWS cash offer.
“When taken together, the Threadneedle letter of intent and irrevocable undertaking to accept the offer … from Dame Ann Gloag … represent approximately 27.44% of Stagecoach’s issued ordinary share capital.”
DWS Infrastructure said it is “a patient long-term infrastructure investor with a proven track record” with multiple investments in the UK such as Corelink, Kelda — the owner of Yorkshire Water — and Peel Ports “where DWS Infrastructure has actively supported capital expenditure investments of >£1 billion during its ownership.”
It said DWS Infrastructure has also invested in other leading European transportation platforms, including Hansea, a Belgian public bus operator.
Stagecoach CEO Martin Griffiths said of the DWS offer: “We believe it will open a new and exciting chapter for Stagecoach, backed by a team who share our vision for a more sustainable future.”
DWS Head of Infrastructure Hamish Mackenzie said: “Stagecoach is a fantastic business with an exciting future as a central player in a revitalised UK bus and coach market.
“As a long-term investor in essential services with a strong track record in the UK and European transport sectors, DWS Infrastructure will back Stagecoach to rapidly capitalise on the growth opportunities presented by increased public and private investment in UK bus and coach.
“We are focused on supporting Stagecoach and its management team to deliver their strategy for the benefit of passengers, local communities and employees, as well as helping achieve ambitious plans for reaching Net Zero.
“We are pleased the board of Stagecoach has unanimously recommended our offer and we look forward to working with the existing management team to grow the business sustainably for the long-term.“
In a stock exchange statement, National Express said: “National Express notes the announcement earlier today regarding the offer for Stagecoach by Inframobility UK Bidco Limited.
“A further announcement will be made in due course.
“In the meantime, the National Express board advises shareholders to take no action in respect of the offer.”