Bus and coach manufacturer Alexander Dennis today threatened to gatecrash a deal that will hand control of rival Optare to India’s Ashok Leyland.
The Falkirk-based company has requested information from Optare so it can consider whether to make an offer for the business, which employs 500 people and recently opened a new facility at Sherburn-in-Elmet, North Yorkshire.
The takeover interest comes a week after Optare announced that Ashok Leyland, which is part of the Hinduja Group in India, planned to increase its stake in the business to 75% through a £4 million share placing by Optare.
The deal with Ashok, which Optare’s chief executive Jim Sumner has said will secure the long-term future of the company, is conditional on the approval of shareholders at a meeting at the company’s head office on January 6.
Ashok, which has seven plants in India, one in the Czech Republic and one in the Middle East, acquired a 26% stake in Optare in July 2010.
Alexander Dennis (ADL) said today: “ADL has written to the chairman of Optare and has requested information on the business of Optare in order to assess whether or not ADL might be prepared to consider making an offer for the entire issued share capital of Optare.”
Optare warned last week that it would be unable to continue trading if the share placing failed to go through.
As part of the agreement, Ashok will provide a £12 million credit line to Optare through the Indian firm’s current banking arrangements.
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.
Under Takeover Panel rules, it has until January 25 to declare whether it intends to make an offer for Optare.