Page last updated at 21:02 GMT, Wednesday, 22 July 2009 22:02 UK

First abandons rival takeover bid

FirstGroup train
The board of FirstGroup responded to an ultimatum on tabling a takeover bid

The UK's biggest transport firm has abandoned plans to bid for its troubled rival, National Express.

The Aberdeen-based FirstGroup said it would be "inappropriate" to consider a formal takeover of National Express due to uncertainties around the business.

The government is taking the National Express-run East Coast main line into state ownership, after the firm asked for its contract to be renegotiated.

National Express has also been warned its other rail deals may be terminated.

Transport Secretary Lord Adonis said that there might be grounds to end its other two franchises - East Anglia and the London to Tilbury and Southend operation - after it refused to continue funding the East Coast line.

'Considerable uncertainty'

The cash-strapped firm had been contracted to run the franchise until 2015, but funding is now expected to run out later this year.

Lord Adonis subsequently announced that a new public organisation - East Coast Main Line Company - would operate the line, which runs between Edinburgh and London.

First said those developments had created "considerable uncertainty" around the business.

In a statement, the firm said: "The board of FirstGroup has considered its position in light of these uncertainties and now believes it would be inappropriate to consider a formal offer at this time."

The company said it had been given a "put up or shut up" deadline from National Express on the merger proposals.

National Express rejected First's preliminary offer for an all share merger last month.



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SEE ALSO
East Coast rail to be state-run
01 Jul 09 |  Business
National Express turns down bid
29 Jun 09 |  Business
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13 May 09 |  Business


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