SCOTTISH transport giant Stagecoach has agreed to an all-share takeover by National Express in a move that is expected to see the chief executive and finance chief leave after the merger.
The deal, which comes after talks between the pair were first revealed in September, will create a combined firm worth around £1.9 billion with a fleet of about 40,000 vehicles and a workforce of around 70,000 people.
Under the terms of the tie-up, National Express shareholders would own around 75 per cent of the combined group and Stagecoach shareholders around 25%.
Stagecoach shares closed up nearly 11% at 82.85p, while National Express shares rose almost 2% to 239.2p after the announcement.
The deal, which will be voted on by shareholders, values Stagecoach at around £437 million.
READ MORE: Bus giants' merger 'compelling proposition'
The firms said that around 50 roles are expected to be cut under plans to cut annual costs by at least £45m following the merger.
The jobs are set to go across the head offices, IT and corporate departments of the two firms, as well as some overlapping senior management positions.
The firms said there would be no frontline job losses, such as among drivers, or depot closures as a result of the deal.
Stagecoach chairman Ray O’Toole will become the chairman of the combined group, while National Express chief executive Ignacio Garat will keep the same role at the merged firm.
READ MORE: Bus giants' merger 'strong value' for shareholders
Martin Griffiths, Stagecoach chief executive, and Ross Paterson, the finance director of the Perth-based business, would be expected to leave their roles, which would follow a handover period after March 2023.
Mr Griffiths said: "Right now it is very much business as usual and lots to be getting on with."
He also said: “We announced we had agreed a potential combination of Stagecoach and National Express Group that would be subject to regulatory approval and shareholder approval so it wouldn’t complete until about this time next year.
“We really see an exciting opportunity to create a significant international multi-modal public transport group that has both significant opportunities to grow great value for all our stakeholders, and that includes our shareholders but also our employees, customers, passengers.
“It allows us to have a stronger balance sheet to support that growth and create synergies which allows us to be more efficient, more competitive and I think as well look forward to the opportunities that public transport will undoubtedly have – it is difficult at the moment but we will come out of this, there will be a world post Covid – I think the bigger companies with scale, diversity, access to capital to capitalise on these opportunities in new technology, new electric fleet, electric/hydrogen, that is going to be significant.”
Source: London Stock Exchange
It follows a previous attempt at a merger in 2009, when Birmingham-based National Express rejected a £1.7bn merger deal mooted by Stagecoach.
The former attempt at a merger between the two would have seen Stagecoach own the majority of the combined group, with National Express left with up to 40%. It is planned to keep the Stagecoach brand identity.
Mr Garat said: "The proposed combination, and the unique strengths of both companies and their teams, will create a leading multi-modal passenger transport business in the UK, aiming to deliver superb services to customers and forging the way to a carbon free future with a new generation of zero-emission buses and coaches.
“The combined group will also benefit from the significant growth and cost synergies and a stronger balance sheet to significantly accelerate growth investment across our diversified international portfolio, aiming to deliver attractive sustainable returns to shareholders.”
Source: London Stock Exchange
National Express said the deal will allow it to use Stagecoach’s depot network to run and maintain its coach operations while also enabling it to expand its new growth initiatives, such as private coach hire, corporate shuttle and accessible transport, across Stagecoach’s UK operations.
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