Due diligence gives National Express consortium cold feet

After a five-week due diligence process, Spain's Cosmen family and CVC Capital Partners have walked away from a National Express takeover, sending the bus and coach operator's shares plunging.

Talks have also been ended by Stagecoach, which had been liaising with the consortium about purchasing National Express's UK bus and rail operations.

Sources have suggested due diligence presented "lots of little things" that caused the parties to call it all off. The consortium had made an indicative 500p-a-share bid, worth around £765 million - or £1.7 billion including debts.

The Cosmens already own an 18.5% stake in the firm, and have said they will support - "within certain parameters" - a £350 million fundraising effort to be launched by National Express next week. The firm is consulting with major shareholders about the fundraising, expected to take the form of a rights issue.

In a statement to the Stock Exchange, National Express maintained the group "has a strong portfolio of businesses" and continues to perform resiliently "despite challenging trading conditions".

"The board believes that National Express has a strong future as an independent listed company, offering a compelling investment case building on the strength of its individual businesses," it concluded.