Go-Ahead dismisses £326m hostile French bid

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The Independent Online

Go-Ahead rejected a £326m hostile cash offer yesterday from Caisse des Depots-Developpement (C3D), a French industrial group, setting the scene for a protracted battle for control of the bus and rail operator. The move is the latest interest by Continental transport groups in the British market, which analysts believe is primed for further growth as the Government pumps money into the sector.

Go-Ahead rejected a £326m hostile cash offer yesterday from Caisse des Depots-Developpement (C3D), a French industrial group, setting the scene for a protracted battle for control of the bus and rail operator. The move is the latest interest by Continental transport groups in the British market, which analysts believe is primed for further growth as the Government pumps money into the sector.

Any takeover of Go-Ahead, either by the French group or a rival British player, will make multi-million pound fortunes for two of its directors, Martin Ballinger and Chris Moyes, who together control about 13 per cent of the company.

Go-Ahead has been the focus of intense publicity since one of its Thames Trains was involved in the Ladbroke Grove crash in which 31 people died. The bulk of its operating profits come from its bus operations in Newcastle, Brighton, Oxford and London. Sir Frederick Holliday, Go-Ahead chairman, said the offer was inadequate: "Their unwelcome offer has been pitched at a level which fundamentally fails to recognise the unique nature and strength of Go-Ahead's business."

The City had been expecting the approach from C3D since Go-Ahead disclosed on 19 July that the French had, on 6 July, offered 650p a share in exchange for a recommendation from the board. The move was rejected. Yesterday's bid - also at 650p a share - was pitched well below Wednesday's close of 672.5p, although it comes at a 50 per cent premium to Go-Ahead's share price before the initial offer. Go-Ahead shares ended 1p lower yesterday at 675p.

C3D, a subsidiary of Caisse des Depots et Consignations, a savings trust, has joined forces for the bid with Rhone Capital, the private equity fund of Rhone Group, a merchant bank. Rhone will take 25 per cent of Go-Ahead if the bid succeeds. C3D and Rhone said yesterday that they had already taken a 6.09 per cent stake in Go-Ahead, and may expand it.

C3D wants to integrate Go-Ahead with its Transdev bus and light rail operator, whose UK holdings include London United buses, which covers routes in south-west London.

Sir Frederick attacked the timing of the bid - just prior to the award by the shadow Strategic Rail Authority of the South Central rail franchise. Go-Ahead is bidding to run the service, which covers routes from London to the south coast, against the incumbent operator Connex, part of the French conglomerate Vivendi.

Although analysts say Connex is likely to winthe award, if it did go to Go-Ahead it could add up to 100p to its share price. They suggested C3D was likely to raise its bid in coming weeks, perhaps up to 720p a share.

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