The potential combination of two UK-based transport groups has hit potential delays following interest from the Competition and Markets Authority
Following the announcement on 14 December that National Express Group and Stagecoach Group had reached an agreement on the terms of a recommended all-share combination of the two groups, the Competition and Markets Authority (CMA) announced on 26 January that it has issued an Initial Enforcement Order (IEO) pursuant to section 72(2) of the Enterprise Act 2002.
The IEO prevents National Express or Stagecoach from disposing of material assets at the current time. The CMA indicated that the purpose of the IEO is to maintain the businesses in their current shape whilst it commences its review of the combination. It will therefore delay completion of the proposed sale of the marketing, retail and customer service activities of Stagecoach’s inter-city coach businesses to ComfortDelGro beyond the previously expected completion date of 28 February.
Stagecoach responded to the IEO by saying: “The Boards of National Express and Stagecoach continue to believe the Stagecoach coach disposal represents a comprehensive solution to any competition concerns that might arise from their overlapping coach operations and will engage with the CMA to allow the Stagecoach coach disposal to complete as soon as possible.”
“We do not expect the IEO to materially affect the day to day operations of either National Express or Stagecoach, and the parties will continue to work with the CMA in relation to its review of the combination. At this stage, the Boards of National Express and Stagecoach continue to expect the combination to complete around the end of 2022.”
The proposed deal between Stagecoach and ComfortDelGro would see the international transport group acquire Stagecoach’s 35% stake in Scottish Citylink Coaches, turning it into a wholly-owned subsidiary of the ComfortDelGro Group. In addition, ComfortDelGro would also acquire the marketing, retail and customer service activities of Stagecoach’s megabus UK coach business and the Falcon coach service which operates in the south west of England. Stagecoach would continue to operate megabus, Falcon, and Scottish CityLink services throughout the UK, along with a number of independent operators, under contract to its new owners.
The deal would mean that ComfortDelGro will become the second largest inter-city coach operator in the country with a market share of about 11%.
