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Bus maker Alexander Dennis Ltd says that it is interested in making an offer for Aim-quoted rival Optare, which is currently going through a financial refinancing and restructuring.
Alexander Dennis has requested information on the Optare business to enable it to make a decision on whether to make a bid. Alexander Dennis does not own any shares in Optare.
Edinburgh-based Alexander Dennis was part of Mayflower Group, which went into administration in 2004 and was subsequently acquired by investors including Stagecoach Group boss Brian Souter. The company has three brands – Alexander, Dennis and Plaxton (www.alexander-dennis.com).
Alexander Dennis has been given until 5pm on 25 January to make an offer. However, Optare holds its general meeting to approve the refinancing and restructuring on 6 January. Optare plans to raise £4m through a placing at 0.27p a share that will give the Indian commercial vehicle manufacturer Ashok Leyland and associated companies 75.1%. Ashok, which is part of the Hinduja Group, will also provide a borrowing facility of up to £12m as part of the plan. A temporary facility of £1.5m has been provided on top of existing borrowings. It is repayable on 30 days notice.
If this all goes ahead then Alexander Dennis will not be able to succeed in any bid without the agreement of Ashok, which is unlikely to want to sell.
Ashok owns 26% of Optare and there is a total of 34.7% of the share capital being voted in favour of the plans. As Ashok already owns 26% of Optare it is in a strong position to block things that Alexander Dennis wants to do.
The Optare share price has risen 0.38p to 0.82p, which values the bus manufacturer at £6.21m. Ashok has said that it intends to retain the Aim quotation.
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