EMBATTLED National Express is set to reject a joint £500 million plus takeover bid from Spain’s Cosmen family and private equity group CVC, it emerged today.

Jul 27 2009 by Jon Griffin, Birmingham Mail

But the future of the debt-laden Birmingham group remained unclear after rival transport operator Stagecoach said it was in exclusive talks with potential buyers over a possible break-up of the firm.

Stagecoach said today it would consider “all other options” for National Express, including its own individual bid.

Reports today said National Express executive chairman John Devaney was to seek the approval of his board to reject the takeover bid from the Cosmen family and CVC.

Sources said Mr Devaney would recommend the joint bid was too low and would ask shareholders to back his vision for organic growth.

The latest twists in the National Express saga come just a month after the firm said it would walk away from its loss-making East Coat Main Line rail franchise, set to fall under Government control by the end of the year.

The UK’s biggest transport firm, FirstGroup, proposed an all-share merger but withdrew its interest last week before the interest from Cosmen/CVC emerged. National Express also has two other rail franchises – if it manages to hold on to them in a possible legal battle with the Government – but Stagecoach will also be eyeing the firm’s bus and coach operations in the UK, US and Spain.

Cash-strapped National Express, which is due to announce half-year figures on Thursday, is labouring under a £1.2 billion debt mountain.

It had been contracted to run the East Coast franchise until 2015, but its expensive bid for the deal was derailed as passenger growth stalled in the recession.