Hindujas back in driving seat as Souter quits bid for bus firm
Jim Armitage is the City editor of The Independent and London Evening Standard group of newspapers. He has been a reporter and editor for more than 20 years and was recently shortlisted for the Press Gazette financial journalist of the year and The Society of Editors financial journalist of the year awards. He contributes news, investigative reports and comment to the Independent titles plus a daily column in the Evening Standard.
Friday 30 December 2011
Struggling British bus-builder Optare looks set to fall into the clutches of the Indian billionaire Hinduja brothers after Sir Brian Souter's rival company pulled out of potential takeover talks less than a day after expressing an interest.
Some industry experts doubted whether the Hindujas were committed to keeping Optare's Yorkshire factory, and its 500 employees, in the longer term, suggesting they would want to move the operation to cheaper factories abroad – a charge they deny. Their Ashok Leyland business already makes buses in the Czech Republic and India.
Ashok Leyland already holds 26 per cent of Optare and recently offered it a £12m financial lifeline in return for a 75 per cent total stake. The offer was welcomed by Optare's management, although smaller shareholders have objected to seeing their stakes diluted.
The deal's announcement on20 December prompted Stagecoach tycoon Sir Brian's business Alexander Dennis on Wednesday to say it was interested in potentially buying the whole company for cash. However, in a strongly worded statement yesterday, it said it had walked away after the Hinduja firm indicated "it has no intention of selling its stake in Optare to anyone at any price".
Shareholders of Optare have watched in dismay as the company has racked up tens of millions of pounds of losses. The Ashok Leyland offer was at an 80 per cent discount to the share price previously. However, Optare's agreement with its banks runs out on New Year's Eve, meaning the business faces a real risk of collapse.
Jim Sumner, Optare's chief executive, has said the tie-up with the Hindujas secures stability and the long-term future of the business. Optare recently moved to new factory facilities in Sherburn, Yorkshire.
Ashok Leyland spokespeople were unavailable for comment.
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