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Bus builder Alexander Dennis eyeing Optare

FALKIRK-based bus builder Alexander Dennis has moved to gatecrash an effective takeover of struggling north of England rival Optare by Ashok Leyland of India by declaring it is considering an offer for Optare.

Shares in Optare jumped 0.15p or 33.3% to 0.6p after Alexander Dennis's statement yesterday morning that it had written to Optare chairman John Fickling requesting information on the business to allow it to assess whether it might be prepared to consider making a cash bid.

This share price jump raised the stock market worth of Optare, which employs about 500 people and has the bulk of its workforce at its new manufacturing plant at Sherburn in Elmet in North Yorkshire, by £1.13m to about £4.5m.

The Alexander Dennis business, which was rescued in 2004 by a high-profile consortium including Stagecoach co-founders Sir Brian Souter and Ann Gloag, Sir Angus Grossart's Edinburgh-based Noble Grossart merchant bank, and businessman and former Rangers owner Sir David Murray, has enjoyed strong growth and healthy profits in spite of the turbulent economic times of the past few years.

It is believed Alexander Dennis, which is being advised by Noble Grossart, has weighed a move for Optare in the past.

Alternative Investment Market-listed Optare announced on December 20 it had conditionally raised £4m in a share placing with Ashok Leyland and associated companies at a price of about 0.27p-a-share. It said the placing was intended to "enable the company to re-bank through banking relationships of the Ashok companies".

It added that, following the placing, which is conditional on approval by Optare shareholders at a general meeting on January 6, the Ashok companies would own about 75.1% of its enlarged share capital. Ashok Leyland, which was set up decades ago as the Indian arm of British Leyland and is now a subsidiary of Hinduja Automotive, acquired a 26% stake in Optare in summer 2010 as part of a long-term strategic alliance.

Optare, which in September announced a rise in first-half losses, has said the proposed £4m placing with Ashok will secure its long-term future.

Alexander Dennis told the stock market yesterday: "The board of Alexander Dennis has noted the announcement made by Optare on 20 December 2011, and the convening of a general meeting of the shareholders of Optare on 6 January 2012. ADL (Alexander Dennis Limited) has written to the chairman of Optare and has requested information on the business of Optare in order to assess whether or not ADL might be prepared to consider making an offer for the entire issued share capital of Optare."

Alexander Dennis revealed that, after discussions between Noble Grossart and the Takeover Panel, the Panel Executive had for now set a deadline of January 25 for it to "either announce a firm intention to make an offer for Optare... or announce that it does not intend to make an offer".

Optare said it had "engaged" with Alexander Dennis's advisers, but said the January 6 general meeting would still take place.

It told the stock market: "The independent directors and the company's advisors have engaged with the advisers to ADL, although there can be no certainty any offer will be made. In the meantime, the company's general meeting, as convened in the circular sent to shareholders on 20 December, will take place on 6 January 2012."

Alexander Dennis achieved turnover of £283m in the year to December 2010, raising pre-tax profits to £4.53m from £3.21m, and is on track for sales of £360m in 2011, with further growth of 15% to 20% targeted in 2012. Turnover was £172m in the year to September 2006. The company acquired rival Plaxton in Yorkshire in 2007 shortly after Colin Robertson took over as chief executive.

Mr Robertson, who this month took the coveted title of Entrepreneur of the Year in the Entrepreneurial Exchange's awards, has embarked on a drive to ramp up Alexander Dennis's export business. The company now has vehicle-building partners in China, Hong Kong, New Zealand and North America. It employs around 2000 people, including about 900 at Falkirk.

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