Government asks Brussels for right to vet French takeover of Go-Ahead

Click to follow
The Independent Online

The Government asked Brussels yesterday to hand back authority for vetting the hostile £326m French bid for the British transport group Go-Ahead because of concerns about its impact on the London bus market.

The Government asked Brussels yesterday to hand back authority for vetting the hostile £326m French bid for the British transport group Go-Ahead because of concerns about its impact on the London bus market.

Kim Howells, Minister for Competition and Consumer Affairs, said the new Director General of Fair Trading, John Vickers, had advised him that the offer from C3D raised "competition concerns in a distinct market" which warranted investigation in the UK. The move increases the prospects of the bid being referred to the Competition Commission, in which case it would almost certainly lapse.

If the takeover were to go through, C3D would own three of London's red bus companies and control around 28 per cent of the bus market in the capital. South of the Thames, C3D's market share would be closer to 60 per cent once its London United operation was combined with Go-Ahead's London General and London Central companies.

As well as breaching the 25 per cent market share limit, C3D would also fall foul of the rules preventing a single company from owning more than two red bus companies or contiguous bus operations.

It is understood that C3D would seek to overcome competition concerns by offering to sell some of its bus interests or operate them at arms length. "This is not an issue at all," said one adviser. The European Commission now has until 20 October to decide whether to agree to the British request.

Chris Moyes, Go-Ahead's commercial director, stressed that it was not relying on regulatory hurdles to thwart the bid. But he added: "It is pretty good going for C3D to breach all three rules governing the London bus market at the same time. There is no precedent for that."

Go-Ahead, which also owns the two rail franchises Thames Trains and Thameslink, yesterday posted a fresh circular to shareholders, urging them to reject C3D's 650p-a-share offer, describing it as unwelcome and inadequate. The company maintained it had tremendous growth prospects and expected to hear this month whether it has been successful in its bid for the South Central commuter franchise, currently operated by Connex. Go-Ahead also plans to bid for at least six other rail franchises including Silverlink, Great Eastern and ScotRail. Winning any of these franchises would improve the group's rail prospects "significantly".

The state-owned French rail company SNCF, which is already Go-Ahead's partner on the Thameslink franchise, is considering whether to launch a counter bid. SNCF is thought less likely to move if the takeover is handed back to the UK for vetting.

Go-Ahead shares closed 5 per cent lower at 695p.

Comments