Stagecoach mulls offer for National Express -paper

LONDON, July 26 (Reuters) - British bus and rail firm Stagecoach (SGC.L) is considering entering the race for rival National Express (NEX.L), trumping an expected bid from Spain's Cosmen family and private-equity firm CVC, according to The Sunday Times.

The operator of South West Trains had appointed Deutsche Bank to draw up plans for all-share offer for National Express, which would create a 1.5 billion pound ($2.5 billion) transport giant, the paper said without citing sources.

National Express, which has a 1.2 billion pound debt burden, has become a target following heavy losses in its UK rail division, causing it to hand back the East Coast franchise, and the departure of its chief executive Richard Bowker.

CVC said on Friday it had made an all-cash approach with the Cosmen family, who gained a 18.7 percent stake in National Express following the sale of their Spanish bus group Alsa in 2005. [ID:nLO697568]

The Sunday Times, citing City sources, said CVC could make a formal cash offer of about 600 million pounds this week.

However, The Sunday Express, which puts the offer at 500 million pounds, said National Express would rebuff the bid as too low.

The company last month rejected an approach from rival FirstGroup (FGP.L).

The Sunday Times said Stagecoach had been working on a bid for some weeks, and if it did not make an offer for the whole company it could join a break-up bid with CVC and the Cosmens.

Stagecoach declined to comment on the report, and National Express said it did not comment on market speculation. (Reporting by Paul Sandle, editing by Will Waterman) ($1=.6049 Pound)