New timetable for National Express

By Geoff Foster for MailOnline
Updated: 04:14 EDT, 28 April 2006

ALL aboard for a £3bn nil premium transport merger. Whispers from the depot suggest that a 'merger of equals' between National Express and First Group could feature in the summer timetable. The two have often been mentioned in the same breath but NE's chief executive Phil White has apparently been at loggerheads with his First Group counterpart, Moir Lockhead.

White retires soon after making a small fortune through the privatisation of the sector and dealers say that his departure paves the way for a 'friendly' deal to be done backed by NE's chairman David Ross, who co-founded Carphone Warehouse.

National Express closed unaltered at 886½p but First Group reversed 7½p to 413½p as rumours circulated.

Analysts believe a merger would stand a good chance of escaping a referral to the Competition Commission because the companies' bus operations do not overlap much.

NE has a 9% share of the bus market, compared with First Group's 21%, and the greater part of its operation is in the West Midlands, where First Group is not represented.

The two also operate major rail franchises and have significant school bus operations in North America. NE bought Spanish bus operator Alsa for £262m in December which pushed net debt to £563m. It retains its Central Trains, Silverlink and Midlands Main-Line rail franchises.

Elsewhere, it proved a perfect time for market-makers to 'shake the tree' and hope a few nervous investors fall out. An outbreak of bird-flu in Norfolk, a sleazy government in complete disarray and a surprise rise in Chinese interest rates and the approaching long Bank Holiday weekend prompted a sharp initial mark-down. Selling ensued and the Footsie had slumped 78 points by elevenses.

Wall Street helped stop the rot when the Dow rallied from 79 points down to 51 up after Fed chairman Ben Bernanke raised the prospect of a pause in Fed interest rate rises. London closed 44.3 points lower at 6,060.

Recently rampant mining stocks took the surprise 0.27% hike in Chinese interest rates to 5.85% badly. They succumbed to aggressive profit-taking on fears that it will lead to declining Chinese demand for commodities. Copper miner Antofagasta lost 110p to 2358p, Anglo American 83p to 2334p, Xstrata 66p to 2015p and RioTinto 99p to 3030p. A Goldman Sachs downgrade increased the pressure on BHP Billiton, 33½p off at 1138½p.

Online gaming stocks were in luck after the American Gaming Associationappeared to move closer to supporting the industry. It plans to establish a congressional study commission to look at the regulating and taxing of online gaming.

It moved broker Numis to say that current US prohibitive bills and any future bills placed before the House of Representatives will fail. PartyGaming advanced 6¾p to 152¾p, 888 Holdings 7p to 244p and Sportingbet 10p to 431p.

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Completion of the sale of its 97.68% interest in Vodafone Japan to a subsidiary of SoftBank Corporation left Vodafone 2¾p higher at 130½p.

Confirmation of a bid approach lifted cash machine operator Cardpoint to 114¼p before it closed 7½p higher at 109¾p.

US financial services giant GE Capital yesterday distanced itself from the situation. Leading shareholders will not accept any cash offer below 150p a share.

SunSystems-to-Pegasus computer software group Systems Union rose 4p to 211p following news of an agreed cash bid worth 215p per share from private company Sugar Acquisition. Entrepreneur and chairman Bob Morton holds 10.5% and so trousers almost £25m.

Australian resources company Hardman Resources cheapened 1¾p to 98¼p after Oriel Securities and JP Morgan Cazenove placed 65.9m shares at 98p a share with institutional investors.

Dealers believe IP Live look oversold at 51½p, down 7½p. The group said trading is in line with expectations but occupancy levels during the first three weeks of Movin' Out, the rock dance musical of Billy Joel songs, have disappointed.

• Aim-listed DCD Media, the TV programme producer and distributor formerly known as Digital Classics, firmed

0.11p to 1.27p. Box TV, the independent drama production company it bought in December, has signed agreements to produce a major new ITV mini series entitled Bon Voyage. Budgeted at over £3m, it has been commissioned to be broadcast later in the year in two parts.