Indian giant Ashok Leyland to buy 26% Optare stake
ASHOK Leyland, one of India’s biggest commercial vehicle manufacturers, is to take a 26% stake in the Lancashire bus maker Optare.
Optare said the deal will enable it to improve cashflow, increase export sales and tap into low cost sourcing channels used by Ashok, which is 51%-owned by the Hinduja Group.
The firm will raise £5m by issuing 99.3 million new shares at 5p each to Ashok, which has emerged as the unnamed suitor considering a takeover approach in January.
The deal will enable Chennai-based Ashok, which has sales of £1bn and is India’s biggest bus maker, to make and sell Optare-designed buses outside Europe.
The Darwen-based firm also plans to raise a further £568,000 from the issue of share warrant shares and £100,000 by placing two million shares with institutional investors.
It is to use the cash to pay off £2m of bank debt but also to ease working capital pressures caused by an order book worth £27.5m.
Chief executive Jim Sumner, said: “We are delighted with today’s announcement and firmly believe that in Ashok Leyland we have found the perfect strategic partner to help Optare realise its full potential by providing best cost sourcing, technology sharing, new distribution channels and joint product development activity.”
Ashok was advised by Richard Harding and John Mock of Ernst & Young’s transaction support team in Manchester.
