Great Western Coffee Shop

FirstGroup, the Aberdeen-based bus and rail group, has made a secret bid approach to National Express, its embattled rival, in a move that could transform Britain^s transport industry.

Martin Gilbert, First^s chairman, made the offer in a letter sent to the home of John Devaney, his opposite number at National Express, last week. It arrived a day after the breakdown of talks between National Express and the Government aimed at resolving a long-running, multimillion-pound dispute over services on the East Coast Main Line.

A combination of the two companies would create a public transport powerhouse, running large parts of the UK bus and rail network and a sizeable chunk of America^s yellow school bus services. The companies would have a combined turnover of about ^9 billion and a stock market value well in excess of ^2 billion.

National Express, which has its headquarters in Birmingham, is expected to reject the approach. It has a trading statement on Wednesday, but may issue a formal rebuff before then. Both companies declined to comment last night.

I think NE probably hold the record for the number of rail franchises lost, so they must be doing something wrong.

I can't see the Competition Commision allowing a merger/takeover.

Why not?  The two routes do not compete with each other so it is hard to see how a reduction in competition will lead to problems for the consumer.

   

What I was refering to was First Group taking over/merging with the whole of National Express Group, not just the rail division. Plus we all know that there is actually very little competition across the UK rail network. (Excepting East Coast v West Coast to Scotland, and open access operators) The competition element comes from the franchise tendering process, so just allowing a takeover/merger to go ahead without careful consideration will not be a good thing. And as has been said on this thread, National Express have rejected the takeover approach. Although that is not an unusual first response.......this story is going to break in a big way very soon I fell.

National Express shares jump on FirstGroup all-share merger approach

National Express shares jumped more than 6pc after Firstgroup confirmed it had approached the rival rail and bus operator about a possible offer.   

FirstGroup said in a statement that its proposed nil-premium, all-share merger ^to maximize the potential of the two companies^ had been rejected. National Express said was focused on implementing a number of initiatives to strengthen the group and did ^not consider it appropriate to enter into discussions with FirstGroup^.   The company is struggling with debts of ^1.2b and is attempting to renegotiate the onerous terms of its East Coast rail franchise with the Department for Transport. On Wednesday it is due to give the City its latest trading update.

im sure they would be willing to show us how a proper democratic railway could be run  ;)

I'm reminded of the oft used quote about Mussolini......... ;D

I'm reminded of the oft used quote about Mussolini......... ;D

being willing to invest money to improve the track

slightly off topic but as far as competition goes, the coop has been forced to sell some of its stores and newly acquired stores to .... tesco of all places? logical decisions are not always made im sure money is involved

First bid for National Express is on track despite debt fears

FirstGroup has confirmed it will carry on with its bid to buy rival transport giant National Express

FIRSTGROUP last night promised to press ahead with its audacious bid for rival National Express despite warnings that the deal could increase the Aberdeen company's debt and force it to ask shareholders for cash.

National Express yesterday rebuffed First's surprise move, describing it in a statement to the Stock Exchange as a "highly preliminary approach" and saying that it did not consider negotiations on a deal "appropriate".

But in its statement to the markets, First said it "continues to believe that there is significant industrial and commercial logic in a combination of the two companies"

At what point has Branson invested a penny piece in track improvements? We have paid for WCML upgrade via Railtrack and Network Rail, not Beardie!


Off topic and off beam - the Co-op was ordered to sell because their takeover of Somerfield meant there were a number of places where they then owned the two (or more in some cases) major grocery outlets in an area, so there would have been a clear lack of choice and competition. Of 133 disposals, Waitrose took 13, Sainsbury's 22, Morrison's 38 and Tesco, er, six - because in most cases there was already a Tesco nearby, so they would faced the same issue as the Co-op. Other shops have gone to Lidl, Asda, Budgens and Spar among others.

The same consideration will apply when it comes to ECML and WCML - the government will never wear the same firm controlling both.

FirstGroup on the road to marketplace domination

FirstGroup's tentative approach to struggling National Express - if it comes off - is likely to be Sir Moir Lockhead's final deal in the UK market.

It is not just that Lockhead turns 65 next year. After all, he is dismissive of any suggestion he will soon be spending more time on his Deeside estate. It is that a combination of the two companies would confirm Aberdeen-based FirstGroup's place as the pre-eminent UK bus and rail company with the maximum market dominance competition authorities are likely to be comfortable with.

FirstGroup is already the UK's largest bus and train operator with 21% of the market including the ScotRail franchise. National Express's share sits at around 5% and is attempting to find a way through dramatically slowing growth on the East Coast Main Line rail franchise between Scotland and London it took on in 2007.

Merging the two would take it to the 25% level most observers reckon is the most regulators will accept.

Lockhead will also have added Greyhound, the iconic US coach operation bought by FirstGroup two years ago, to National Express's substantial bus operations in Canada, California and Texas and combined two of the top school bus operators in North America.

FirstGroup yesterday played down the significance of its overtures to National Express, which earlier this month was given breathing room on the covenants governing its ^1.2bn debt. FirstGroup told investors it had made a "preliminary approach to National Express "with a view to entering discussions about a possible offer". It highlighted the "significant industrial and commercial logic" of a combination.

London-based National Express was coy: "At the present time the board is focused on implementing a number of initiatives to strengthen the group and does not consider it appropriate to enter into discussions with FirstGroup."

The market, which has been worried about National Express's efforts to renegotiate its East Coast franchise deal, reacted warmly to signs it could yet escape its troubles.

National Express's shares closed up 27p, or 9.8%, at 302.75p. FirstGroup was down 4.75p, or 1.3%, at 366p.

A combination of the pair would create a company with a turnover of ^9bn and stock market value of more than ^2bn.

It would also mark the culmination of a remarkable 20-year journey for a company that began life as a ^5m employee and management buy-out of then council owned Grampian Regional Transport in Aberdeen.

FirstGroup now runs one in five local bus services carrying three million passengers a day. It has four train franchises - First Capital Connect, First Great Western, First TransPennine Express and FirstScotrail, where it replaced National Express in 2004.

Surprised tesco hasn't put in a takeover bid hehe

Nice to see that despite all their internal problems at the moment, Iranians are being kept up to date with National Express's woes! I wonder if there is anyone in Tehran who has visited the Coffee Shop.

Too much hassle and not enough profit.

The BBC is reporting that the chief executive of National Express (and former head of the SRA) Richard Bowker is to resign.
http://news.bbc.co.uk/1/hi/business/8127775.stm

Can the forum run sweep stakes as well as polls, would be interesting to see what figure the next franchise goes for, I^ll start things off with a premium of ^0.6M

And i'll predict that Deutsch Bahn get the franchise  :)

At what point has Branson invested a penny piece in track improvements? We have paid for WCML upgrade via Railtrack and Network Rail, not Beardie!

yay more placcy pendos

Take a look at this: http://news.bbc.co.uk/1/hi/business/8057663.stm

They are prepared to invest "billions".

That's what a profit making company that runs a TOC should do - invest money. Chiltern did Evergreen 1 (ok - not on their money as such, but still investment) and got a long franchise reward. Virgin obviously want to - and on their own money.

Did you really mean ^600,000? or ^0.6 Billion?

But they haven't actually spent any of their own money yet. Branson just wants a franchise extension on the cheap without a contest and is on record god knows how many times claiming that the Pendolinos and Voyagers are investment by Virgin when they were paid for and are owned by a leasing company.

And VWC is most certainly not a profit-making company - it gets a nice fat subsidy every year courtesy of you and me through our taxes.

Chiltern had to spend money under the terms of their franchise. No spending means they lose franchise.

I'm not saying they aren't paying lease fees but Beardie has never qualified his remarks in that way. It's always we have invested blah, blah, blah in trains - which they haven't, unlike, for example, First Group, which bought a number of HSTs outright for FGW's use.

New bidder for National Express as First Group pulls out of takeover

National Express was at the centre of fresh takeover turmoil last night after rival transport operator First Group walked away from making a formal offer for the troubled rail and bus group and another unnamed bidder appeared on the scene.

There was intense speculation about the identity of the new suitor, understood be a European private equity company.

First Group, which initially approached National Express in June with proposals for an all-share merger of the two businesses, ditched its plans after its target asked the City's Takeover Panel to impose a "put up or shut up" deadline for it to make a formal offer.

Within minutes of Britain's biggest transport firm announcing its withdrawal, National Express disclosed it had received an approach "in connection with a possible offer for the group from another third party whose intentions are not yet known".

National Express, which is in turmoil following the resignation of chief executive Richard Bowker and its decision to walk away from the loss-making ^1.4bn east coast rail franchise, said in a statement: "There can be no certainty that this approach will lead to an offer being made for National Express, or as to the terms on which any offer might be made."

Under Takeover Panel rules, First Group is now banned from bidding for six months unless a rival offer emerges. The group, operator of the First Great Western rail franchise and yellow school buses in the US, had wanted to do the deal on friendly terms, but was rebuffed.

National Express said at the time it was concentrating on implementing a number of initiatives to strengthen the business and did not consider it appropriate to enter into merger talks.

A merger of the two groups would have created a business carrying more than 1.4 billion bus passengers and 409 million rail passengers in the UK a year.

Sir Moir Lockhead, the First Group chief executive, said last night: "In making a preliminary approach to the board of National Express, our intention was to enter discussions with a view to seeking a recommended merger that would create a significant British transport group, in a stronger position to compete with state-run companies across Europe. We believe this combination would have offered a highly compelling proposition to both sets of shareholders."

First Group said it had decided it would be "inappropriate" to consider a formal offer "at this time" because of the uncertainty facing National Express, which has been warned that the Department for Transport might strip it of its other franchises, East Anglia and c2c, the London to Tilbury and Southend operation.

But it said it reserved its right to return with an offer in the event of a rival bid being made or if it received the backing of the National Express board.

National Express had refused to enter into discussions with First Group even though it does not have a chief executive after the decision by Bowker to depart for the Middle East, and the controversy over the east coast main line.

National Express had been trying to renegotiate the franchise on the London to Edinburgh route ^ for which it had paid ^1.4bn ^ and received the approach from First Group just two days before the dramatic move by the Department for Transport.

National Express was warned by the transport secretary, Lord Adonis, that there might be grounds to terminate its two other rail franchises after it refused to continue funding the east coast line.

The cash-strapped firm had been contracted to run the franchise until 2015, but funding is now expected to run out later this year. The problem with the franchise was that National Express had to pay back to the government a total of ^1.4bn in premiums over the life of the deal. But passenger growth has stalled in the recession and the company was unable to renegotiate the franchise with the DfT.

Adonis subsequently announced that a new public organisation ^ East Coast Main Line Company ^ would operate the line.

National Express reveals second takeover approach as FirstGroup drops bid

In a dramatic skirmish after the markets closed on Wednesday, FirstGroup said it had decided not to make a formal offer, citing "uncertainties" surrounding its rival's UK rail franchises.

An hour later National Express said it had "received an approach in connection with a possible offer for the group from another third party whose intentions are not yet known".

Sources speculated that interested parties could include Stagecoach, the Scottish travel firm; SNCF, the French operator; as well as Deutsche Bahn of Germany.

Stagecoach linked with National Express

Stagecoach, the bus and train operator, was linked with a takeover bid for its crisis-hit rival National Express last night as FirstGroup, a third competitor, walked away from a possible deal.

Stagecoach, headed by Brian Souter, its founder and chief executive, was named by transport industry sources as the interested party after National Express confirmed receipt of a second approach.

Nobody from Stagecoach was available for comment last night.

FirstGroup, Britain^s biggest transport company and best known for its controversial running of the First Great Western rail franchise, dropped plans to bid for National Express after being handed a ^put up or shut up^ deadline from the Takeover Panel.

And, from The Times (http://business.timesonline.co.uk/tol/business/industry_sectors/transport/article6723880.ece):