National Express is in talks to acquire rival transport firm Stagecoach.
It comes after a drop in passenger numbers last year due travel restrictions and fewer commuters travelling to work.
Under the terms of the potential deal, National Express would own about 75% of the combined group and Stagecoach 25%. The possible all-share deal values Stagecoach at approximately £445m.
The combination of National Express, which operates bus and coach services in the UK, Spain and the United States, and Stagecoach, the UK’s largest bus operator, would create a business with a fleet of 36,000 buses and coaches.
In a statement confirming the discussions, the two companies said that it would bring together the “best of both” businesses and deliver operational efficiencies, such as National Express using Stagecoach’s UK network of depots in its coach operations.
National Express has until 19 October to make a firm offer. If the merger goes ahead, Stagecoach chairman Ray O’Toole would become chairman of the board and National Express chief executive Ignacio Garat would become chief executive of the combined group.