Watchdog investigates £1.9bn National Express & Stagecoach tie-up

A £1.9bn merger between rival bus groups Stagecoach and National Express has been paused while the competition watchdog investigates the deal.

The tie-up, which involves an all-share takeover by National Express, was agreed in December.

The Competition and Markets Authority (CMA) has served an enforcement order, which stops the companies from combining while it considers the plans.

The merger would create a combined fleet of about 40,000 vehicles.

The total workforce after the deal would be around 70,000, with 50 jobs expected to be cut from the head offices, IT and corporate departments of the two firms.

Stagecoach said that it and National Express still believed planned disposals would be a "comprehensive solution to any competition concerns that might arise from their overlapping coach operations".

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It added that the firms will cooperate with the CMA to enable the tie-up to complete "as soon as possible".

However, it said the investigation would delay the anticipated sale of its intercity coach businesses to ComfortDelGro Corporation, which operates in seven countries.

The Competition and Markets Authority indicated that it seeks to "maintain the businesses in their current shape" as it starts its probe into the merger.

If the deal went ahead, Stagecoach would also sell off its Megabus UK and Falcon South-West coach service operations, as well as its 35% stake in Scottish Citylink bus services.

The firms - which were hit hard by falling passenger numbers in the pandemic - say the deal would save the combined company costs of at least £45m each year.

Government funding to help transport firms through the crisis expires at the end of March.

The current merger follows a previous attempt to combine in 2009 when National Express rejected a £1.7bn bid from Stagecoach.