Spain's Cosmen family, which owns 18.5% of National Express, is working with buy-out firm CVC on the potential deal.

The UK's biggest transport firm, FirstGroup, pulled out of a possible takeover on Wednesday citing "uncertainties" over the business - but National Express said at the time it had received another approach from an unnamed third party.

CVC confirmed the speculation in the Financial Times but did not comment on reports that the interest valued National Express at £500 million.

The Cosmens took their stake in 2005 when National Express entered the Spanish coach and bus market with the acquisition of Alsa, which was owned by the family.

Jorge Cosmen is currently deputy chairman of the UK firm, which employs 43,000 people through operations in the UK, North America and Spain.

CVC said in a brief statement that an indicative proposal had been made to the board of National Express. Shares were almost 8% higher after the statement.

CVC is said to have written to the board three days ago, although National Express is looking for an offer of around 400 pence - more than £600 million - before engaging with any bidder, the FT says.

Earlier this month, National Express was forced to walk away from its loss-making East Coast rail deal after failing to renegotiate the franchise with the Government.

The firm, which is almost certain to hand over the franchise to the Government by the end of the year, has been warned it could lose its two other rail franchises - East Anglia and London commuter service c2c.

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CVC confirms interest in National Express bid

Times Online: July 24, 2009
Martin Waller

The biggest shareholder in National Express, the transport operator, has confirmed that it is considering an offer for the debt-burdened transport company.

CVC, Capital Partners, the venture capital group, this morning confirmed reports that it had teamed up with Spain's Cosmen family to make an "indicative proposal" for a cash bid.

Earlier today, National Express said it would press the Cosmens, its biggest shareholder, over the reports that they and CVC planned a takeover bid worth more than £500 million.

"We're trying to clarify the intentions of this new prospective bidder," a National Express spokesman said. The Cosmen family took a 9.9 per cent stake in National Express in 2002 when they sold their coach and bus operation in Spain in 2006 and have since built their stake by judicious market purchases to 18.5 per cent.

They and CVC are considering an offer for National Express, which is burdened with £1.2 billion of debt. The CVC statement said there was "no certainty that any offer will be made in relation to National Express".

Earlier this month the company was forced to announce the abandonment of the East Coast rail route after faling to extract more money from the Government. The franchise is due to be handed back by the end of this year.

The Spanish approach was notified to the stock market yesterday, but the company failed to identity the potential bidder. An earlier possible offer, from rival transport firm FirstGroup, was subsequently withdrawn.

Reports suggest National Express is holding out for as much as £6 a share before entering bid talks, somewhat in excess of the Spanish approach. National Express shares were 14p higher this morning at 338p.

Other transport companies are thought to be looking at National Express, but none has revealed an intention to bid.

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Spain's Cosmens court NatEx

Financial Times: July 24 2009
By Lina Saigol and Robert Wright
Additional reporting by Gill Plimmer

Spain's Cosmen family has teamed up with CVC, the private equity group, to make a joint takeover bid for National Express, in a deal that could value the debt-laden transport group at more than £500m.

The family, which is the biggest shareholder in National Express with 18.5 per cent of the shares, sent a letter to the board of the company three days ago, according to people close to the situation.

National Express disclosed the takeover approach in a statement to the Stock Exchange yesterday after FirstGroup, the initial bidder, walked away.

National Express refused to name the new bidder and said its intentions were "not yet known".

National Express shares rose 4.4 per cent to 324p.

People close to the situation said the Cosmen family and CVC wanted to acquire all of National Express and roll over its £1.2bn of debt to its existing group of lenders, which includes Spanish banks.

However, the board of National Express is thought to be looking for a bid of at least 400p a share, valuing National Express at nearly £620m, to engage with any new bidder.

FirstGroup's decision to walk away appears to have been at least partly motivated by the cool reception it received from National Express.

Stagecoach and Go-Ahead, National Express's rivals in the UK bus and rail industry, are also both considering their options, but have yet to approach the company.

Any bid by the Cosmens would be a bold move by the family, who received their initial 9.9 per cent stake in 2005 as part of the £262m National Express paid them for Alsa, their privately held bus and coach operation. Jorge Cosmen, Alsa's president, is National Express's deputy chairman.

National Express last night declined to comment on the identity of the bidder. Stagecoach also declined to comment, while Go-Ahead could not be contacted.

National Express has been struggling under the weight of its debt, which was mostly assumed in its takeover of Alsa and the £450m all-cash takeover in 2007 of Continental Auto, another Spanish coach operator.

On July 1, it was forced to announce that it would offer no further support to its lossmaking National Express East Coast rail franchise.