Interesting release from, the Teamsters. There definitely seem to be a few issues at bubbling away at National Express...
NATIONAL EXPRESS GROUP PLC REFUSES TEAMSTERS’ CALL FOR INDEPENDENT BOARD COMMITTEE TO EVALUATE TAKEOVER BIDS
Teamsters Cited Need for Independent and Transparent Review Process
National Express Group PLC [NEX.L] has refused the International Brotherhood of Teamsters’ call that the company’s board establish a special committee of independent directors charged with evaluating potential strategic transactions and reporting back to shareholders.
In an Aug. 3 letter to John Devaney, chairman and acting chief executive of the UK transport company, Teamsters General Secretary-Treasurer C. Thomas Keegel outlined the urgent need to establish an independent and transparent review process. National Express Group PLC’s response that day said that the company "sees no need to change the way in which matters of this kind are dealt with."
Among the Teamsters’ concerns: National Express Group’s £36.6 million loss in the first half of 2009; continuing turmoil over the rail franchises; the need to recruit a new CEO; and an escalating takeover battle that includes a potential bid involving the board’s deputy chairman Jorge Cosmen.
"In light of these troubling developments and apparent conflicts of interest on the board, it is crucial that a special committee of independent directors conduct the review of potential and formal bids using a transparent process that gives shareholders full confidence that the board is acting in our interests," Keegel said in the letter.
Noting that Cosmen is a member of the same Cosmen family that is leading a consortium with CVC Capital Partners that is exploring a potential bid for National Express Group, the letter urged that members of the special committee be fully independent of both National Express Group and the Cosmen family to build investor confidence in the company’s ultimate recommendations and protect Jorge Cosmen from any undue criticism throughout this process.
Welcoming Devaney’s leadership as acting chief executive following former CEO Richard Bowker’s abrupt resignation, the letter also noted Devaney’s statement to investors last week that the search for Bowker’s successor could take up to six months. The letter therefore suggested that shareholders’ interests would be best served by having a fully independent director chair the special committee.
In its response letter, National Express Group confirmed that Cosmen has not been involved in considering the consortium’s approach, nor any other approach that has or may be received by the company. However, National Express Group did not confirm whether Devaney is leading the review process and stated that "the Board that is reviewing any such issues is comprised of a majority"—not an entirety—"of independent directors." The company’s letter did not disclose the process currently being followed and made no commitment to report on such process to shareholders.
National Express Group has recently found itself in the center of a takeover battle, with rival FirstGroup PLC and the consortium approaching the company with preliminary offers. Other potential bidders reportedly include Stagecoach Group PLC and The Go-Ahead Group PLC.
The escalating takeover battle comes on the heels of National Express Group losing its CEO and signaling its intent to relinquish the East Coast rail franchise—its most significant business contract—later this year. The embattled company is now in conflict with the U.K. Department of Transport over the retention of its profitable East Anglia and C2C rail franchises.
"The company’s refusal to adopt a fully independent and transparent process during these turbulent times undermines investor confidence in the board’s leadership on these critical decisions affecting the future of National Express Group," Keegel added.
Founded in 1903, the International Brotherhood of Teamsters represents over 1.4 million hardworking men and women in the United States, Canada and Puerto Rico.