Group opens discussions with private equity firm CVC and large shareholder the Cosmen family about acquiring some National Express businesses in the event of a successful takeover

Stagecoach joined the bidding fray for National Express this morning as it confirmed it is in talks to join a Spanish-led consortium stalking the public transport group.

The Perth-based bus, rail and coach group has opened discussions with private equity firm CVC and the Cosmen family, the largest shareholder in National Express, about acquiring some of the group’s businesses in the event of a successful takeover offer.

“Stagecoach confirms that it is in exclusive discussions with the consortium regarding the possible acquisition by Stagecoach of certain businesses and assets of National Express in the event that the consortium acquires National Express,” said the company. It is believed Stagecoach is interested in the UK rail, bus and coach operations of National Express, although it could combine both companies’ US bus operations as well.

National Express confirmed this afternoon that it is considering the cash offer from the Cosmen consortium. It said the proposal was subject to several preconditions, including that National Express continues running the East Anglia and c2c rail franchises. Some MPs have called for the company to lose both franchises following its decision to abandon the east coast main line.

National Express also said it would “seek to clarify the status of Stagecoach’s discussions”, to see whether it would help the consortium achieve its aim.

It is understood that the National Express executive chairman, John Devaney, is minded to concentrate on restoring the debt-laden group’s financial health rather than accept a bid to take it private. Investors, though, may put pressure on directors to accept a proposal that reportedly values National Express at 400p a share – or just over £600m.

Stagecoach added that it will consider “all other options” regarding National Express, having appointed Deutsche Bank to advise on a potential all-share offer for the group.

National Express has become a takeover target after building up debts of £1.2bn that are threatening to breach loan covenants. A row with the government over its £1.4bn east coast rail franchise, which it expects to abandon later this year, has also weakened its hand strategically after the transport secretary, Lord Adonis, pledged to bar National Express from bidding for rail contracts in the future. Devaney has also launched the process to recruit a new boss following the surprise resignation of Richard Bowker, National Express chief executive, on the eve of the announcement that the group is stepping away from its east coast contract.

Some analysts argue that the east coast row could make the group a more attractive takeover target because without the onerous London-to-Edinburgh contract the business generates strong profits. According to research by Astaire Securities, National Express will generate cash flow of about £150m a year if it loses its rail franchises. Lord Adonis is determined to strip the company of its c2c and National Express East Anglia contracts if it abandons the east coast contract. National Express wants to retain its remaining contracts, which produce healthy profits, and is willing to take the dispute to the high court. The dispute is expected to loom over any takeover battle for the group, whose shares rose 4.7% to 362p this morning, valuing National Express at £529m.