National Express agrees a truce in row with rebel shareholder

US hedge fund Elliott Advisors, the transport group’s biggest shareholder with a 17.5 per cent stake, had called for a boardroom shake-up and accused the company of failing to compete for new opportunities and damaging shareholder value.

Elliott said it wanted bus and rail operator National Express investors to elect three new independent directors to push for changes at the firm at its annual general meeting today.

However, sources close to talks between the pair yesterday said National Express would appoint former DHL UK boss Chris Muntwyler, a candidate proposed by Elliott, to its board.

The sources added that Elliott would, in return, promise not to challenge National Express’ board publicly for at least a year.

“The two have reached a compromise,” one source close to the talks said.

“Elliott are pleased one of their guys will be on the board and National Express have someone they rate highly.” National Express on Friday said growing first-quarter profits showed it did not need the radical change of strategy called for by Elliott.

The transport group said growth across all of its divisions had helped pre-tax profit grow 30 per cent in the first three months of 2011.

Legal & General Investment Management, the fourth-largest investor in National Express, on Friday said it would not join a push for a boardroom shake-up at the firm, despite Elliott saying that it had the backing of the transport group’s second-largest investor, Spain’s Cosmen family.

National Express’s chief executive Dean Finch said: “No one is picking up arms to fight each other but Elliott are our largest shareholders with 18 per cent of the company’s stock and deserve a voice – they have put their money where their mouth is and we are listening to them.”

The company said revenues grew five per cent in the first quarter, with UK rail sales up eight per cent and its UK bus and coach units also delivering solid growth.

It added that its Spanish business had continued its recovery during the period and that its US school bus business was also performing well.

Panmure analyst Gert Zonneveld said: “This is a good start to the year and full year outlook remains good.

“The company seems to be in control of its businesses and is delivering on its targets.”

National Express said that its cost control initiatives and increased investment programme are now bearing fruit and demonstrated that its strategy is sound.