The National Express takeover of Stagecoach is facing an investigation by the competition regulator, it has been announced.

The all-share deal, which would value the combined business at about £1.9bn, was confirmed last month.

It would bring together the country’s biggest bus and coach operator in Stagecoach, which includes the Megabus brand in its stable, and National Express which is best known for its long-distance UK coach services.

It also has operations abroad in the US, Spain and Germany.

The pair indicated the tie-up would result in cost savings and provide new growth opportunities as they recover from the huge hit to business inflicted by the COVID-19 pandemic that saw demand for travel collapse.

But they also anticipated at the time of the deal that the merger would attract the interest of the Competition and Markets Authority (CMA).

The watchdog said on Wednesday that it had served a so-called initial enforcement order, which stops the companies from fully combining while it considers whether the deal would be harmful.

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Stagecoach said the CMA’s action would delay the planned sale of the marketing, retail and customer service operations of its inter-city coach businesses to ComfortDelGro Corporation Limited.

It added that the merger partners continued to believe that the sell-off would be a “comprehensive solution to any competition concerns that might arise” from their overlapping coach operations.

Stagecoach said the firms would “engage with the CMA to allow the Stagecoach coach disposal to complete as soon as possible”.

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