Liberum downgrades Stagecoach to 'hold' following cash offer

Stagecoach has recommended an all-cash takeover offer from an infrastructure fund managed by DWS Infrastructure at a 37% premium to its prior closing price and 51% above the look-through price of an all-share offer from National Express. As a result, Stagecoach withdrew its recommendation for the National Express offer.

While Liberum said it views the implied multiples as "underwhelming", it thinks the terms do offer "a material premium" to the terms of the alternative National Express offer, as well as the certainty of cash, lower execution risk and faster completion.

Stagecoach co-founder Ann Gloag, who holds a 10.5% stake in the firm, has given an irrevocable undertaking to accept the cash offer, while Threadneedle, which owns 16.98% of the firm, has given a non-binding letter of intent to accept and directors, who control 14.6% of the company, were still bound by their previous irrevocable undertaking to accept the National Express offer.

"In the current equity market environment we suspect that shareholders will find a 105.0p cash offer acceptable. Given the share price has risen to this level, we cut our target price to 105.0p from 131.0p to match the offer and downgrade our recommendation to 'hold' from 'buy'," concluded the analysts.