National Express has cemented its hold on the Spanish transport market by purchasing Continental Auto, the country's second-largest coach and bus group, for £449.7 million, its biggest acquisition to date.

The British bus and train operator now controls around 15 per cent of Spain's coach and bus market after buying Alsa for £250 million in 2005.

On completing the Continental Auto transaction, National Express will operate 2,100 vehicles in Spain and will carry 142 million customers each year on long-distance, commuter and urban journeys.

The acquisition of Continental Auto is subject to approval by the Spanish regulatory authorities. Shares in National Express rose 1.53 per cent, or 19p, to £12.59. Since buying Alsa, National Express said its Spanish customer numbers had increased by 3.5 per cent, bolstered by long distance travel over the Easter period.

National Express, which has financed the acquisition of Continental Auto though debt, was one of a number of companies bidding for the group through a competitive tender.

It is understood that Doughty Hanson, the private equity group that owns the Spanish bus group Avanza, was also in the running. Arriva, the British transport group, and the UK-listed venture capitalist 3i are also understood to have looked at Continental Auto.

National Express said today it would continue to use the Alsa and Continental Auto brands separately. Cost-cutting would be minimal since there is little geographical crossover between the two groups.

For example, Continental Auto operates in Spain's Andalucian and Catalonian regions, where Alsa has little presence.

In its last financial year to December 31, 2006, Continental Auto generated £134 million in turnover and £18.6 million in pre-tax profits.

National Express hinted today that it would not pursue acquisitions in the short-term. The company is expecting to hear the results of its bids for the East Midlands and Cross Country train franchises in the next few weeks and is set to submit a tender for the Inter-City East Coast franchise by June.

It said today that the number of customers travelling on National Express-operated trains had increased by 6.8 per cent in the first quarter.

National Express also operates in the US market, and one of its key businesses is providing buses for school routes. The company said that it was still bidding for school route business and had so far won more new business that it did in 2006.

National Express said: “We have made a good start to the year and the board looks forward to the future with confidence.”

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