👋Stagecoach ditches National Express for rival takeover offer

View this email in your browser

10th March 2022

Bite-sized business news from the UK and beyond

Good morning It’s been a bad week for McDonald’s. First it was heavily criticised for continuing to operate in Russia despite other big brands pulling out. And now it’s facing a $900m lawsuit for allegedly misleading customers over the availability of ice cream.

Today's stories

Changing routes – Stagecoach ditches National Express for rival takeover offer
Bills, bills, bills – Russia struggling to pay its debt

TRANSPORT
Stagecoach ditches National Express for rival takeover offer

What’s going on?
National Express’ £445m takeover offer for fellow bus and rail operator Stagecoach has been gazumped. Stagecoach has now agreed to a £595m approach from DWS a German investment fund.

Why is this important?

Last December National Express and Stagecoach announced that they had agreed to merge, creating a group worth £1.9bn, with a fleet of 40,000 vehicles and a workforce of 70,000.

It was easy to see why they wanted to join forces. Public transport passenger numbers have been decimated by lockdown and the pandemic-related growth in home working. By combining, Stagecoach and National Express would be able to cut costs and improve their chances of survival.

But a merger was never going to be easy. The combination of the two largest bus operators attracted the attention of the competition regulator who earlier this year launched an investigation into whether the deal would dampen competition and lead to worse outcomes for consumers.

These sorts of investigations are notoriously lengthy and painful. An offer from a company outside the sector would therefore be more appealing to Stagecoach.

DWS has a track record of investing in transport businesses across Europe and has stakes in a number of UK companies including Corelink Rail Infrastructure and Kelda, the owner of Yorkshire Water.

Zooming out

A takeover by DWS offers Stagecoach a lot more certainty – lower execution risk, no competition regulator investigation and greater continuity with management. Not to mention it means 30% extra payment to shareholders.

RUSSIA
Russia struggling to pay its debt

One of the many consequences of starting a war and receiving retaliation sanctions is that it makes repaying your debts much harder. That’s the situation facing the Russian government which is on the brink of defaulting on loans from international investors.

Three of the world’s biggest credit rating agencies have all downgraded their view of the country’s debt to “junk”, the lowest rating and an indicator that a default could be on the horizon. That also means that investors will charge higher interest to lend to that country.

The Russian economy has been weakened by the sanctions from the UK, US and EU. The exclusion of several Russian banks from using SWIFT, an international payments system, have restricted Russians’ ability to do business outside of their home country. More recently the West announced plans to ban Russian oil and gas imports, a major source of Kremlin income.

The Russian rouble has lost almost half its value and reached a record low since the war in Ukraine began. This makes repaying debts, usually denominated in US dollars or euros, a lot more expensive.

If Russia were to default it would send its economy into a further downward spiral and have ripple effects beyond its borders.

European banks are major owners of Russian debt. Italy's second biggest lender Unicredit says it would have to write-off €7.4bn while France's BNP Paribas would be €3bn out of pocket.

But the most damaging impact can be on the country's people. If your government finds it more difficult and more expensive to borrow, then that pain gets passed on to consumers leaving them with less disposable income.

Stat of the day

107 years after it sank, explorer Ernest Shackleton's ship Endurance has been found in near pristine condition in Antarctica

Other stories to keep you in the loop

UK consumer spending strengthens in February as Covid rules relaxed
Petrol soars above £2 a litre
London gadget maker backed by iPod inventor raises $70m
Marks & Spencer buys stake in online sportswear retailer The Sports Edit
Amazon, PlayStation and Heineken exit Russia over Ukraine war
Oil prices plunge as UAE supports supply boost
EU regulators set to give Amazon’s £6.4bn MGM snap up the green light
Branch banking to be dead and gone in Europe by 2025, survey says

Interesting links from around the web

How 11 Brits sourced their biggest salary bump
The complete log of every lie new Batman Robert Pattinson has ever told on a talk show over the past 15 years
4 big lessons for getting the most out of a career change

Forward to Friend

Not a subscriber? Join free

How did you like today's email?
Get in touch with any feedback or even just to say hi
hello@marketloop.co

Copyright © 2022 Market Loop, All rights reserved.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list (and break our hearts).

This email was sent to you
why did I get this? unsubscribe from this list update subscription preferences
Market Loop · 16 Great Chapel St · London, London W1F 8FL · United Kingdom

👋Stagecoach ditches National Express for rival takeover offer

Older messages

🔥West weans itself off Russian energy

📈How the war in Ukraine is feeding food inflation

👋Russian exodus

👋Farewell Roman

👋Bidders drop out of the running to buy Boots

You Might Also Like

How This "1 PAGE" Website Makes $21,000/Month!

$1,654 in DAILY sales 😮 (Beta-Tester results + NEW system)

Founder Weekly - Issue 669

Building AI Agents the Easy way

Are you a Chaos Coordinator? It's one of the top gifts on Amazon

The Market Is Pushing Asset Prices After Inflation Report — But Should It Be?

When Video Matters And When It Shouldn't

😎Wake up, babe. State of Marketing just dropped.

VC climate-tech funding falls for 3rd year

🦅 We're rescheduling Jesse Pujji's masterclass