Go-Ahead rejects £332m approach

Go-Ahead, the north-east based bus and rail operator which owns the Thames Trains franchise, yesterday rejected a £332m takeover bid from a government-controlled French group. The bid, from the French industrial holding group Caisse des Dépÿts et Consignations, and a private equity fund Rhÿne Capital, emerged just a day after Prism Rail accepted a £166m offer from National Express.

Go-Ahead, the north-east based bus and rail operator which owns the Thames Trains franchise, yesterday rejected a £332m takeover bid from a government-controlled French group. The bid, from the French industrial holding group Caisse des Dépÿts et Consignations, and a private equity fund Rhÿne Capital, emerged just a day after Prism Rail accepted a £166m offer from National Express.

Go-Ahead described the 650p-a-share offer, made on 7 July, as "unwelcome and wholly inadequate". Go-Ahead shares rose 20 per cent to 658.5p The French consortium said it was now considering its options in light of the rejection but it is not thought likely to proceed with a hostile bid.

Martin Ballinger, Go-Ahead's chief executive, and Chris Moyes, its commercial director, stand to net £40m to £50m if they agree to recommend an improved offer from the French. The 650p-a-share offer values Mr Ballinger's stake in Go-Ahead at £23.6m and Mr Moyes' shareholding at £18.6m. Between them, the two directors own just under 13 per cent of the company.

A Go-Ahead spokeswoman described the offer as "opportunistic" but dealers speculated on the French coming back with improved terms.

Thames Trains was one of the rail companies involved in the Paddington disaster, caused after one of its drivers went through a red signal, colliding with a Great Western express and killing 31 people.

Thames Trains could lose its franchise when the Cullen inquiry into the disaster reports. The first stage of the inquiry is due to end next week. Go-Ahead also owns the Thameslink franchise which has just been put out to re-tender. It has also been shortlisted to bid for two other commuter franchises, Connex South Central and Chiltern.

Advisers to the French consortium conceded there was uncertainty over the future of Go-Ahead's two rail franchises. But they pointed out that trains only accounted for a quarter of Go-Ahead's business while 75 per cent of revenues came from bus and airport operations.

Caisse des Dépÿts et Consignations made the offer through its industrial holdings company Caisse des Dépÿts-Developpement (CD3), which has interests in transport, housing, engineering and urban development. Its principal business, Transdev, owns London United Buses and is also a partner in the Arrow consortium which is building a tram network in Nottingham.

Go-Ahead also has extensive bus operations in London. Although the two companies together would control 25 per cent of the London bus market, CD3 said it did not anticipate any competition problems.

Go-Ahead shares had fallen from a 12-month high of 925p before last October's Paddington crash to a low of 424p earlier this month. But in the last few days they have risen sharply on bid speculation.

The French already have a strong presence in the UK rail market. Vivendi owns two south-east franchises through its Connex subsidiary while Go-Ahead operates the Thameslink franchise in partnership with Via GTI of France.