SCOTTISH transport giant Stagecoach has agreed to an all-share takeover by rival National Express.

The deal will bring two of the UK's biggest transport companies together to create an organsiation worth around £1.9 billion.

It'll have a workforce of around 70,000 people and a fleet of 40,000 vehicles.

Under the terms of the tie-up, National Express shareholders will own around 75% of the combined group and Stagecoach shareholders around 25%.

Martin Griffiths, chief executive of Perth-based Stagecoach, said: "This is an exciting opportunity to bring together two of the UK's iconic transport brands to create a strong, diverse business that is well-placed to grow the market for greener and smarter public transport for the benefit of all stakeholders."

The deal follows a pay row which hit the headlines in October.

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Ignacio Garat, chief executive of National Express, will continue in that role at the merged firm. He said: "The proposed combination of National Express and Stagecoach, and the unique strengths of both companies and their teams, will create a leading multi-modal passenger transport business in the UK."

Stagecoach was founded by brother and sister team Brian Soutar and Ann Gloag in 1980 and has grown to become of Scotland's biggest brands. 

In 1989 it became the first UK transport firm to expand overseas when it invested in operations in Malawi. Further international and domestic expansion followed, including the opening of a rail division in the early 1990s. Its budget offering Megabus launched in 2003.

Soutar was also a prominent SNP donor and became a controversial figure due to his campaign for the retention of Section 28, which was also known as Clause 2a and prohibited the "promotion of homosexuality" in schools. It was repealed by the Scottish Parliament in 2000.