'FirstGroup in secret move for National Express', from The Times (29/06/09)

[whole diary]

[Chris from Nailsea]

From The Times:

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^▸ (United Kingdom) 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.

[JayMac]

I can't see the Competition Commision allowing a merger/takeover. If, as is rumoured, National Express (NE) are struggling with their East Coast franchise, the only option that should be open to them is to 'hand the keys back' to the DfT^» (Department for Transport - about). Sea Containers had to do this with their GNER^▸ (Great North Eastern Railways) franchise. Of course the problem NE have with doing this is that if they lose one franchise they have to give up their others; something the DfT are probably not keen on seeing happen.

Should NE have to give up NXEC^▸ (National Express East Coast), NXEA^▸ (National Express East Anglia) and c2c, then a new franchise tendering process will need to be started. Whilst this is ongoing the DfT can allow NE to continue to operate these franchises on a management contract. If NE can't or won't do this then temporary state ownership is the only option, as happened with the South Eastern franchise. Another operator should not be permitted to take over NE. Of course First Group could bid for the franchises if they become available.

I see a time in the not to distant future when NE are out of the rail game altogether and concentrating on what they do best.....running scheduled coaches. They are already divesting themselves of some of their UK^▸ (United Kingdom) bus operation. I think NE probably hold the record for the number of rail franchises lost, so they must be doing something wrong. Admittedly their Wessex franchise did offer a better service to some than the current encumbant. I think there is a website about this somewhere!

[Timmer]

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

Didn't they once hold the record for having the most number of franchises at any one time?

[JayMac]

Here's an interesting article that gives a lot of background to the financial woes currently faced by National Express.

http://www.guardian.co.uk/business/2009/jun/17/national-express-debt-deal

....and if National Express do lose/give up NXEC^▸ (National Express East Coast), NXEA^▸ (National Express East Anglia) and c2c and they go into state ownership for a while, how about rebranding the three franchises as one. Perhaps a good name for this entity would be 'British Rail Eastern Region'

[Henry]

 Reports on Sky news that NE have rejected the takeover approach.

 I think their is still to come on this move though.

 If NE could not make the East Coast mainline pay, why do First Group think they can do better ?

[Tim]

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.

   

[Btline]

I think Virgin would do the best job on the ECML^▸ (East Coast Main Line).

Whatever you (and I!) think about the trains they introduced on XC^▸ (Cross Country Trains (franchise)) and WCML^▸ (West Coast Main Line), they seem to have an edge over reducing journey times, improving frequencies, being willing to invest money to improve the track etc.

As for NXEA^▸ (National Express East Anglia) and c2c, either First or Govia - perhaps one each.

[JayMac]

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^▸ (United Kingdom) 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 feel.

[Tim]

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^▸ (United Kingdom) 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.

I take your point.  FGW^▸ (First Great Western) trains would appear to compete with NX coaches on Bristol-London for example.  Not sure the CC woudl neccessarily disapprove through.

[6 OF 2 redundant adjunct of unimatrix 01]

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

[Chris from Nailsea]

From the Tehran Times (no, seriously! ):

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.

[JayMac]

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.

[6 OF 2 redundant adjunct of unimatrix 01]

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

[JayMac]

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.........

[6 OF 2 redundant adjunct of unimatrix 01]

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.........

there are a few! lol actually i think the most appropriate of his quotes is;

 ''Fascism should rightly be called Corporatism, as it is the merger of corporate and government power''
... isn't that how the railways are ran here?