By Scott Wright

THE battle for Stagecoach took a dramatic turn yesterday when it emerged the board of the Perth-based bus giant had reached agreement on a cash offer from a German investment company valuing it at nearly £600 million, eclipsing a previous deal tabled by National Express.

And the 105p per share offer from a fund managed by DWS Infrastructure, valuing Stagecoach at £565m, could lead to the headquarters of Stagecoach staying in Perth, with the current management team led by chief executive Martin Griffiths remaining in place.

Shares in Stagecoach surged by 36 per cent as investors digested the news, closing up 27.83p at 104.38p.

Until yesterday, Stagecoach was on course to merge with National Express. Terms were agreed on a £1.9 billion all-share merger between the two companies in December following an initial approach from National Express in September.

With Stagecoach shareholders expected to own 25% of the combined company under that deal, it valued the Scottish business at around £475m. But in January the deal was held up when the competition watchdog opened an enquiry.

National Express was understood to be assessing its options last night. In a statement, the company noted the new offer and said its board “advises shareholders to take no action in respect of the offer.” It said: “A further statement will be made in due course.”

The offer from National Express envisaged that the enlarged business would be based in Birmingham, and lead to the departures of Stagecoach chief executive Martin Griffiths and finance director Ross Paterson. Current National Express boss Ignacio Garat and finance chief Chris Davies would have occupied the same roles in the merged company.

However, DWS is proposing to retain the existing Stagecoach headquarter functions and related roles in Perth, London and Stockport, and that the overall headcount in frontline operational roles would be unchanged. In addition, the business would continue to be led by current senior management team, with Mr Griffiths and Mr Paterson staying in place.

Stagecoach currently employs around 24,000 people, and is currently recruiting for 60 posts in Perth, where it will open a new customer contact centre in spring.

DWS is a long-term infrastructure investor, with a particular focus on transportation and essential infrastructure. It has multiple investments in the UK, including Corelink, Kelda (owner of Yorkshire Water) and Peel Ports, and has stakes in other European transportation platforms, including Hansea, the Belgian public bus operator.

The company said that “with a significant market share, and a track record of strong financial performance and predictable long-term cash flows” Stagecoach fits its investment criteria. It pledged to invest in the company’s asset base to help it play a role in the drive to net zero.

Stagecoach was founded in 1980 by siblings Dame Ann Gloag and Sir Brian Souter. Yesterday, DWS said Dame Ann had given an irrevocable undertaking to vote in favour of its offer in respect of her 10.5% shareholding.

Sir Brian and other Stagecoach directors, including Mr Griffiths and chairman Ray O’Toole, who between them hold 14.6% of the shares, are not permitted to accept, having given irrevocable undertakings to vote for the National Express offer. However, those undertakings may lapse, for example if National Express does not intend to proceed with its offer, or it has not been completed before March 31, 2023.

Mr Griffiths said: “Stagecoach is a leading multi-modal public transport operator and the proposed offer presents a major opportunity to maximise the significant growth potential ahead as governments seek to deliver economic recovery, level up communities, provide better health outcomes for citizens, and transition to a net-zero future. We believe it will open a new and exciting chapter for Stagecoach, backed by a team who share our vision for a more sustainable future.

“We also believe it will deliver positive outcomes both now and in the long-term for all of our key stakeholders: the customers and the communities we serve, the people who deliver our high-quality transport services, our partners in national and local government, and the investors who have supported our continued success over many decades.”

Hamish Mackenzie, head of infrastructure at DWS, said: “Stagecoach is a fantastic business with an exciting future as a central player in a revitalised UK bus and coach market. As a long-term investor in essential services with a strong track record in the UK and European transport sectors, DWS Infrastructure will back Stagecoach to rapidly capitalise on the growth opportunities presented by increased public and private investment in UK bus and coach.

“We are focused on supporting Stagecoach and its management team to deliver their strategy for the benefit of passengers, local communities and employees, as well as helping achieve ambitious plans for reaching net zero. We are pleased the board of Stagecoach has unanimously recommended our offer and we look forward to working with the existing management team.”