Takeover battle sees National Express highlight value of longer road to rewards
National Express has pleaded its case to Stagecoach’s shareholders as it seeks to regain the initiative in the takeover battle with DWS.
National Express’s acquisition intentions were made public last September before it made a firm offer in December.
However last week global investor DWS Infrastructure came forward with a £595m offer for Stagecoach – more than £200m than the current value of National Express’s all-share bid.
Ironically, news of DWS’s superior bid – and the shift in support by Stagecoach’s board to its offer – saw National Express’s share price respond positively.
National Express’s offer to give 0.36 National Express shares in exchange for each Stagecoach share was worth £385m before DWS’s offer was made public. At last night’s closing price of 232p, the deal would be valued at £460m.
However the Midlands-based transport group believes there are annual cost savings of £45m to be found from a combined group.
It has “illustratively valued at an estimated pre-pandemic National Express trading multiple of 12.2x” to suggest the synergies would unlock value of more than £500m for shareholders.
It has also sought to persuade Stagecoach’s shareholders that its offer “represents a superior value creation opportunity” and also provides them “with the opportunity to participate fully in the exciting future of the industry”.
National Express also highlighted the strength of its share price before the pandemic, which it is yet to recover from.
It averaged 421p over 2019 – and posited that should its share price return to that level, and when the value of the synergies were included, would provide value equivalent to a 170p-per-share offer. DWS’s all-cash offer is for 105p-per-share.
