India group refuses to relinquish hold on Optare shares

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Bus maker Alexander Dennis yesterday 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 per cent stake in Optare, which is based in Sherburn-in-Elmet, and recently announced its intention to treble it to 75 per cent in a deal that should secure the future of the North Yorkshire-based business.

A £12m 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 on Wednesday 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 per cent 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 has an order book worth £59m after winning a contract to supply 190 of its Solo SR midibuses to Cape Town in South Africa.