Bus maker Alexander Dennis today admitted defeat in its brief skirmish with India’s Ashok Leyland for control of rival firm Optare.
The Falkirk-based company, which is backed by Stagecoach founder and chief executive Sir Brian Souter, walked away after it was told Ashok had no intention of selling its shares in Optare “to anyone at any price”.
The Indian bus maker owned by the Hinduja Group already holds a 26% stake in Optare and recently announced its intention to treble it to 75% in a deal that should secure the future of the North Yorkshire-based business.
A £12 million credit line will be made available to Optare if shareholders back the cut-price issue of shares to Ashok at a meeting on January 6. Optare, which employs more than 500 people, warned last week that it would be unable to continue trading if the share placing failed to go through.
Alexander Dennis said yesterday it had asked Optare to open its books so it can decide whether to make a rival offer for the firm.
Optare’s shares rose by 50% at one stage but the prospect of a bidding war has proved short-lived after Optare’s financial adviser told Alexander Dennis that Ashok has no intention of selling up.
The bus building industry has been impacted by a lack of trade credit insurance, which along with higher levels of export business, has placed “considerable pressure” on Optare’s working capital requirements.
It added last week: “To support the company going forward the business requires banking facilities and headroom that is substantially higher than the present arrangements.”
Optare, which was established out of the former Leyland Bus business Charles H Roe in 1985, has an order book worth £59 million after it recently unveiled a contract to supply 190 of its Solo SR midibuses to Cape Town in South Africa.
Components will be supplied by Optare and assembled by South African firm Busmark 2000 at a new plant in Cape Town.
The current order book, which compares to £34 million in January, stands to get a further boost following the Government’s recent announcement of a further round of ‘green’ bus funding from April.
Alexander Dennis employs around 2,000 people worldwide, including at Guildford and Scarborough in the UK, as well as in Asia and North America. It also owns coach building business Plaxton