National Express could be set to leave the rail industry within a few weeks, according to industry sources. The East Anglia and c2c franchises are expected to transfer to Stagecoach, while ATOC says East Coast will be in the hands of the DfT by early December.

It had been thought that an announcement would be made about East Anglia and c2c by 16 October, but the Spanish buyers of National Express are expected to ask for more time to complete the due diligence process before confirming their offer. Any remaining uncertainties are thought to concern the Spanish coach operations of NX, rather than its assets in Britain.

Stagecoach Group has been involved in three-way talks with National Express and the Department for Transport for at least two months, and Railnews understands that a transfer of the two rail franchises has already been agreed. However, the East Coast contract is still set to be taken back in-house by the DfT. A spokesman for ATOC said today that NX is expected to surrender the franchise within the next six or seven weeks at most.

The Spanish Cosmen family, who are making a bid for NX worth £765m, are proposing to break up NX if the deal goes ahead, which would allow Stagecoach to take over the British arm. Although the East Coast franchise will be effectively renationalised under current plans, Stagecoach is expected to acquire the East Anglia and c2c rail franchises, the Midland Metro tram concession and the bus companies National Express West Midlands (formerly Travel West Midlands) and National Express Dundee. However, Stagecoach stated on 3 September that its negotiations do not include National Express coaches, and the remaining acquisitions will require the approval of Stagecoach Group shareholders.

National Express has been hampered by rising debts, currently around £1bn, and its East Coast franchise has also been badly affected by the economic downturn. The premiums agreed with the DfT from December 2007 involved an average payment of £500 000 a day over the life of the franchise, which would have run for just under eight years. By comparison, premiums for the previous GNER franchise, which failed at the end of 2006, were equal to payments of £350 000 a day over ten years.

NX has been renegotiating its loans with banks, and these talks are continuing. The latest offer from the Cosmen family, which already owns 18.6% of National Express,  values the Group at 500p a share. Cosmen is working in partnership with private equity group CVG to conclude the takeover.

Stagecoach said it had already announced its interest in National Express to the Stock Exchange, and had no further comment to make for the time being.


 

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