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Copyright 2008,
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MPs call for radical overhaul of rail franchises
The government pledged to reform the rail franchise system yesterday as Stagecoach became the latest public transport group to be linked with National Express, owner of Britain’s biggest rail contract.
Lord Adonis, the transport secretary, said he would consider longer franchises after severe criticism from MPs in a report published today that describes the rail network as a “muddle”.
National Express is expected to hand back the east coast main line franchise later this year after admitting that it cannot afford a contract that requires payments of £1.4bn to the government by 2015. The admission, and the departure of Richard Bowker, the train operator’s chief executive, have left the company in disarray and sparked a potential takeover battle.
Stagecoach was linked with a bid for National Express yesterday, less than a week after FirstGroup renounced its interest. Sources close to the situation now expect Stagecoach to come under pressure from the Takeover Panel, which oversees mergers and acquisitions in the City, to clarify its intentions. Stagecoach has reportedly appointed Deutsche Bank to explore an all-share takeover offer.
The Perth-based bus, coach and train operator has been tipped to move for National Express since last week, when National Express received an approach from its largest shareholder, the Cosmen family, and the private equity firm CVC Capital Partners.
Last night it was reported that National Express is set to reject the Cosmen-CVC bid early this week on the basis that it puts too low a value on the company.
FirstGroup, another public transport operator, has dropped its interest in National Express after attempts to broker an all-share takeover were rejected. Analysts believe that a cash offer of around 400p per share, valuing National Express at more than £600m, could persuade a reluctant board to sell the business.
