National Express Stagecoach merger gatecrashed by German investor DWS

Stagecoach shares soared after a German asset manager gatecrashed its planned merger with rival National Express.

In December, the bus, coach and tram operator agreed to an offer from National Express that valued it at around £470m.

But the Stagecoach board has now withdrawn support for that offer and instead backed a rival bid from DWS Infrastructure worth 105p a share or £595million.

Stagecoach shares jumped 36.9 per cent, or 28.25p, to 104.8p while National Express rose 25.6 per cent, or 49.2p, to 241.8p.

The tie-up would have seen the businesses merge with Stagecoach investors owning 25 per cent of the combined entity while National Express shareholders took the remaining 75 per cent.

National Express acknowledged the swoop by DWS but advised Stagecoach shareholders to take no action and that it would make a further announcement soon.

The bidding war has pitted founders Sir Brian Souter and Dame Ann Gloag – the brother and sister who set the firm up in 1980 – against each other.

While Souter has backed the National Express bid, Gloag has thrown her weight behind DWS.

Analysts at broker Peel Hunt said the deal was ‘clearly positive for Stagecoach’ as well as the wider bus and rail sector, which they noted had been hit hard by higher fuel prices. 

They also highlighted that a ‘sharp decline’ in National Express’s share price in recent weeks meant its all-share offer was now worth only around 70p per share, a third less than the new bid from DWS.

The FTSE 100 jumped 3.3 per cent, or 226.61 points, to 7190.72 while the FTSE 250 climbed 4.4 per cent, or 851.58 points, to 20069.20. 

The rebound came as traders hunted for bargains amid hopes that recent selloffs could provide a fertile hunting ground for potential takeover bids as buyers looked to snap up companies on the cheap.

‘With share prices down across so many sectors, someone looking to acquire could find more attraction valuations in the current market so opportunistic bids could become a theme over the coming months,’ said AJ Bell investment director Russ Mould.

However, he added that convincing shareholders to accept a takeover swoop would be a ‘key challenge’ as there would be ‘a strong argument to suggest that current share price weakness may only be short-lived’.

There was some selling among the major miners as investors took profits after soaring commodity prices pushed shares higher in the sector. 

Rio Tinto was down 1.2 per cent, or 70p, at 5817p while Fresnillo dropped 7.3 per cent, or 58.8p, to 749.6p, Glencore slipped 1.3 per cent, or 6.1p, to 470.1p, Antofagasta fell 1.3 per cent, or 20p, to 1498p and Anglo American dipped 2.1 per cent, or 79p, to 3753.5p. 

Oil stocks also dipped as crude prices pulled back slightly from recent highs. Shell was down 1.7 per cent, or 35p, at 2004.5p and BP fell 2.2 per cent, or 8.45p, to 371.55p.

Meanwhile, firms hit hard by the outbreak of war were on the rise as traders looked for cheap stocks. British Airways-owner IAG gained 11 per cent, or 13.38p, to 134.66p while easyJet ascended 12.6 per cent, or 56.2p, to 503.2p and Wizz Air jumped 15.6 per cent, or 392p, to 2909p.

Banking stocks also mounted a recovery with Lloyds rising 8.2 per cent, or 3.42p, to 45.38p, Barclays adding 6.3 per cent, or 9.54p, to 161.8p, NatWest up 6.1 per cent, or 11.95p, at 209.4p, HSBC bouncing 4 per cent, or 18.65p, to 489p and Standard Chartered higher 6.3 per cent, or 29.4p, at 493.1p.

Blue-chip engineer Electrocomponents surged 118 per cent, or 102p, to 970p after upgrading its forecasts.

The group expected its full-year profits to be ahead of estimates after highlighting better than expected trading in the nine weeks to March 4.