LONDON (Reuters) – British bus and rail operator Stagecoach’s <SGC.L> proposed takeover boosted shares in rival National Express <NEX.L> but gains were capped by fears that regulatory hurdles and debt deadlines could scupper a deal. Analysts said a tie-up would make a lot of sense for debt laden National Express and help Stagecoach’s earnings but some suggested National Express might instead have to push ahead with a capital hike given pressure on its balance sheet.

National Express said on Sunday that Stagecoach had made a “highly preliminary” approach, proposing an all-share deal in which National Express shareholders would own no more than 40 percent of the combined group.

The new group would have a market value of about 1.7 billion pounds ($2.8 billion), based on Friday’s closing share prices. (here )

National Express shares were up 9 percent at 394.1 pence by 9:33 a.m. EDT (1333 GMT) off a peak of 399.8 pence but still well below levels above 470 pence seen over the last month. Stagecoach was down 0.6 percent at 155.6 pence.

National Express slid over 20 percent on Friday after a consortium led by Spain’s Cosmen family walked away from a proposed 765 million pound offer that valued the group at 500 pence per share.

Stagecoach’s approach also implied a value of up to 500 pence a share for National Express said analysts at Collins Stewart while Panmure Gordon & Co put the figure at 490p and Arbuthnot Securities at 480p.

“National Express remaining independent looks highly unlikely,” Collins Stewart analyst Andrew Fitchie wrote, pointing to its lack of a chief executive, the need to cut a 1 billion pound debt pile and weakness at its U.S. business.

LONDON (Reuters) – UK Internet advertising firm Media Corp said Google Inc had lifted a penalty that hurt its rankings in Internet search results, adding the move could boost its 2010 pretax profit by 1 million pounds ($1.6 million).

Shares in the company were up 25 percent to 3 pence by 1205 GMT (8:05 a.m. EDT) on Monday, having earlier been up as much as 37 percent, meaning the stock has trebled over the last week.

The penalty, which Media Corp said it did not know the reasons for, relegated the company’s key www.gambling.com site from number one on the Google search to around number 100 and also impacted its www.creditcardexpert.co.uk site.

In an interview with Reuters, Chief Executive Justin Drummond said the change to Google ratings, which coincided with the relaunch of Gambling.com, would provide an immediate boost to the company’s revenue.

“It’s very lucrative for us, potentially (adding) a million pounds on to bottom line profit. Every day you’ve got thousands of people clicking through from Google for free and we can sell those leads onto the gambling sites,” he said.

Drummond said he expected underlying pretax profit for the year to September 2010 to be around 1.5 million pounds ($2.5 million), rising to over 3 million the following year.

The company made a pretax loss of 1.8 million last year.

LONDON (Reuters) – A consortium led by Spain’s Cosmen family has walked away from National Express <NEX.L>, deciding not to mount a takeover bid after spending a month poring over the British bus and train operator’s books.

National Express shares by over a quarter, as months of takeover speculation drained out of the stock and investors fretted over what had spooked the prospective bidders.

But Cosmen, National Express’s biggest shareholder, did throw its conditional support behind the heavily indebted company’s alternative of an equity fundraising, in which it is expected to seek about 350 million pounds ($568 million).

Last month, Cosmen and private equity partner CVC Capital Partners approached National Express with a proposed 765 million pound offer worth 500 pence per share, an improvement on a previous 450 pence approach.

News the proposal had been withdrawn sent National Express shares sliding 25.07 percent to 352.9 pence by 1330 GMT.

“The collapse of the CVC/Cosmen approach raises concerns about what was found during due diligence and whether or not their lenders were prepared to be supportive,” said Gerald Khoo, analyst at Arbuthnot Securities.

But sources involved in the deal said raising loans to fund the mooted takeover had not been a problem.

LONDON, Oct 16 (Reuters) – A consortium led by Spain’s Cosmen family has decided against making a takeover offer for National Express <NEX.L> after spending a month poring over the British bus and train operator’s books.

National Express said on Friday , however, that the Cosmen family had decided to support a proposed equity fundraising.

Last month, Cosmen and private equity partner CVC Capital Partners approached National Express with a proposed 765 million pounds ($1.24 billion) offer worth 500 pence per share, an improvement on a previous 450 pence approach.

National Express said on Sept. 11 it had opened its books to the consortium following the improved offer and on Sept. 25 the two sides agreed to extend an offer deadline imposed by regulators to give Cosmen/CVC more time to inspect accounts.

The company became a takeover target earlier this year after struggling to lower a debt pile of almost 1 billion pounds and announcing it would walk away from its flagship East Coast rail franchise due to mounting losses.

National Express said on Friday that it now planned to turn to shareholders for help get the company back on track.

“The board believes that strengthening the group’s balance sheet through an equity fundraising is now the most appropriate course of action,” it said in a statement.

LONDON, Oct 15 (Reuters) – Part-nationalised British bank Lloyds <LLOY.L> needs a deal that is “demonstrably” better for taxpayers than a proposed asset insurance plan to get government backing for it, a person familiar with the matter said.

With global markets on the up, Lloyds, 43 percent owned by Britain, is considering an exit from a costly government-backed asset protection scheme (APS) to insure 260 billion pounds ($422 billion) of the bank’s assets against losses from bad debts.

“The only deal that is on the table is the APS. For the government to consider other alternatives there would have to be a deal that demonstrably represented a better deal for the taxpayer,” the source told Reuters on Thursday.

The source said no decisions were imminent.

To replace the scheme Lloyds would need to boost its capital by about 25 billion pounds to win the approval of Britain’s financial regulator, industry sources have said.

That would likely include a rights issue of 10-15 billion pounds, sources and analysts have said. Lloyds has lined up six investment banks to run a rights issue if it gets the go ahead, people familiar with the matter said on Monday. [ID:nLC354416]

A key issue would be whether the government would support a massive cashcall, which would require it to spend about 6 billion pounds to prevent dilution of its stake.

LONDON, Oct 13 (Reuters) – ITV <ITV.L> raised 135 million pounds ($213 million) in a convertible bond issue on Tuesday to relieve the burden of looming debt repayment deadlines and said the advertising downturn was easing, lifting its shares as much as 9 percent.

Britain’s biggest commercial free-to-air broadcaster, struggling to find a new chairman and chief executive, also moved to plug a gaping hole in its pension fund and reiterated it had no plans raise money by directly issuing new shares.

“We view all of these developments positively,” Numis analysts, who have a ‘hold’ rating on the stock, said in a note. “The current board reiterates its comments that it has no plans for a rights issue, though we retain our view that a new management team should raise equity.”

ITV shares, which have lost more than half their value since mid 2007, were up 6.8 percent at 50.55 pence by 1600 GMT, having risen as high as 51.75 pence.

Already grappling with falling revenues, rising competition and what it sees as a regulatory strait-jacket, ITV said on Monday its search for a new leadership team had suffered a fresh setback, with two contenders for the post of chairman ruling themselves out. [ID:nLC270508]

Whoever takes on the role may face a slightly easier environment than many had feared, however, after ITV said the rate of decline in television advertising had continued to ease during the second half of 2009.

Revenues from advertising at its family of channels were expected to fall by about 3 percent year-on-year in October, ITV said, predicting a similar level of decline for November. That compares with a 15 percent drop in the first half of the year.

LONDON, Oct 12 (Reuters) – ITV <ITV.L> said two contenders to succeed Michael Grade as chairman of Britain’s biggest free-to-air commercial broadcaster had ruled themselves out, dealing a fresh blow to its long search for new leadership. ITV also said on Monday that chief operating officer John Cresswell had to be interim chief executive but planned to leave the company once a permanent CEO had been found.

ITV, facing the worst advertising downturn for decades, has been searching for a new chief executive since May when Grade, then executive chairman, announced he would step back from the day-to-day running of the company.

Its search for a chairman, who will select the next chief executive, began in September when Grade agreed to leave the company altogether after it failed to secure former BSkyB <BSY.L> boss Tony Ball as chief executive.

ITV, which had said as recently as Sept. 25 that the search for a new chairman was “well advanced”, said both former Channel 4 and BMI British Midland chairman Michael Bishop and former Reed Elsevier chief Crispin Davis had ruled themselves out as candidates for the position of chairman.

“The (nominations) committee has revised its shortlist accordingly and is continuing its search with all due speed,” ITV said in a statement.

Cresswell, who had been seen as a contender for the post of of chief executive, would leave to “seek a fresh challenge”, ITV said.

Analyst Patrick Yau at Canaccord Adams said Bishop ruling himself out of the running was significant.

LONDON (Reuters) – Britain’s Lloyds Banking Group said it was still assessing ways to exit or reduce its participation in a state scheme to insure its toxic assets, after reports it plans to raise 25 billion pounds.

The part-nationalized bank will struggle to leave the asset protection scheme (APS) altogether and a lot depends on whether UK regulators see its plan as too risky and on the remedies imposed by European competition authorities, analysts and investors said.

“It is feasible that Lloyds could raise 25 billion pounds through, for example, 10 billion pounds of asset sales and liability management, and a 15 billion pound rights issue with UKFI (UK Financial Investments) subscribing to just over half of that,” said analyst at Credit Suisse.

“But execution risk is likely to determine whether this is allowed…we still think that Lloyds will struggle to escape APS altogether, with a marked reduction in participation most likely,” it added.

By 1024 GMT Lloyds shares were down 3.24 percent at 92.5 pence, the biggest faller in the FTSE 100 share index.

“There are a range of options available to us and we continue to monitor them,” a Lloyds spokesman said. “We issued a stock exchange announcement two weeks ago and our position has not changed since then.”

Lloyds said on September 18 it was in talks with the government and financial regulators over possible alternatives to the scheme and that all options were open. Lloyds will insure 260 billion pounds of risky assets under the APS, but it is regarded as an expensive option.