Talks centre on a plan for Stagecoach shareholders to own a 25% stake in the combined group. Both sides believe there are significant savings to be had, with, for example, National Express Coach using Stagecoach’s depot network to run and maintain its operations.

In a joint Stock Exchange statement, the two firms said a combined entity would also accelerate expansion of National Express’s growth businesses such as private hire coach, corporate shuttle and accessible transport across Stagecoach’s UK footprint.

National Express said pre-tax cost synergies are expected to reach “at least £35 million”, with approximately 25% achieved by the end of the first year, 85% by the end of the second year and 100% in year three.

The plan may mean job losses, with an estimated one-third of savings coming from “rationalisation of duplicate plc costs, back office and IT processes, digital savings and combined procurement and the potential for non-depot property and office footprint rationalisation”.

National Express said this process would require one-off costs of “up to approximately £40 million”.

A deal will be put to shareholders based on an 18% premium on the share price at close of market on 20 September.