National Express shuns suitor

National Express has rejected an opportunistic takeover approach from FirstGroup

The UK's biggest transport firm, FirstGroup, said that struggling rival National Express has snubbed an approach over a possible takeover.

Aberdeen-based First said there was a "significant industrial and commercial logic" in a combination of the two companies.

National Express is burdened with debts of £1.2 billion and attempting to renegotiate the onerous terms of its East Coast rail franchise with the Department for Transport.

The firm said it did not consider it appropriate to enter talks with its larger suitor "at present".

A potential combination of the two firms would consolidate First's position as the UK's largest operator, although any deal is likely to attract the attention of competition authorities.

First is already the UK's biggest bus operator, running more than one in five of all local buses, and a quarter of the UK's passenger rail network.

It has four rail franchises - First Capital Connect, First Great Western, First ScotRail and First TransPennine Express - as well as operating Hull Trains services under an open access agreement.

National Express, which operates buses in the West Midlands and Dundee, has three rail deals - the East Coast and East Anglia franchises as well as the c2c London commuter service.

The group agreed to pay £1.4 billion to the DfT over the life of the East Coast deal - struck before the recession.

But revenue growth on the franchise has since stalled, edging up by just 0.3% in the first three months of the year.