Regulator to probe National Express-Stagecoach merger

National Express announced in December it had agreed to acquire rival Stagecoach in an all-share deal that valued Stagecoach at around £445m and the combined business at around £1.9bn.

However, on Wednesday, the Competition and Markets Authority confirmed it would be investigating the planned merger. The regulator has served an initial enforcement order, meaning the deal cannot proceed, nor can the companies carry out any other deals, while the impact of the proposed merger is assessed.

All other details, including a deadline for the phase 1 decision, have yet to be confirmed.

When they announced the deal, National Express and Stagecoach said it would cut costs and create growth opportunities as the sector recovers from the massive impact of Covid-19. They also acknowledged that the deal was dependent on CMA approval, however.

National Express is best known for its long-distance coach services in the UK, although it also has operations overseas, including the US, Spain and Germany. Stagecoach is the UK's biggest bus and coach operator, and owns the Megabus brand, among others.

Stagecoach said the enforcement order meant it would have to delay the agreed sale of the marketing, retail and customer service activities of its inter-city coach businesses to Singapore’s ComfortDelGro, also first announced in December, beyond the expectation competition date of 28 February.

But it added: "The parties will continue to work with the CMA. At this stage, the boards of National Express and Stagecoach continue to expect the combination to complete around the end of 2022."

As at 1030 GMT, shares in National Express were ahead 2% at 262.4p, while Stagecoach was trading 1% higher at 92.3p.