News : Ashok Leyland Takes Control Of Optare

Carole Nash Classic Insurance Specialists

 The once former body building plant of C.H Roe in the BL era which became Optare after a Management buy out, has now passed into Indian control… with a familiar name.
Optare - Once part of Leyland, now part of, erm, Leyland!

Ashok Leyland has increased its holding in Optare from 26% to 75.1%. The refinancing is being achieved by Ashok Leyland providing a guarantee to support Optare’s re-banking which will provide substantially improved working capital for the business. Ashok Leyland will increase its stake to 75.1% of the company’s share capital through a placing of shares raising new equity.

The existing contractual and statutory employment rights and pension rights of all Optare employees will be safeguarded. The move follows Optare’s inability to secure re-banking as a stand-alone business and will see Ashok Leyland investing £4million and facilitating a £12million credit line.

Ashok Leyland first invested in Optare in July 2010. The announcement of its increased stake in the company comes as Optare confirms it has secured the contract to supply 190 Solo SRs to South Africa, a deal worth up to £18million. This comes shortly after Alexander Dennis (ADL) making an offer to purchase the company, only to be re-buffed by the shareholders. ADL who’s shareholders include the infamous Stagecoach MD Brian Souter, were forced to withdraw its offer after Opatre shareholders voted 99.9% in favour of the Ashok Leyland offer to increase their existing 26% shareholding to 75%.

Optare chief executive officer Jim Sumner said: ‘This is great news for Optare’s customers, employees and suppliers by securing stability and the long-term future of the business. The re-banking of Optare represents a critical milestone in the turnaround of the business and allows us to now complete the final phase of the three-year plan which commenced in June 2009. In addition, our recent move to a new factory in Sherburn gives us the capacity and modern assembly facilities necessary to capitalise on the additional sales our deeper partnership with Ashok Leyland will undoubtedly deliver.’

John Fickling, Optare chairman, added: ‘Given the global economic challenges we all face, this is a game-changing deal for Optare. It ensures that we can grow and prosper in an ever-changing and demanding market place”.

And Vinod Dasari, managing director of Ashok Leyland, notes: “We see this as an important element in realising our vision of being among the top five bus manufacturers globally. Through leveraging the synergies of the two companies, we are confident that going forward we will be able to accelerate technology sharing, develop future-ready products and increase our global footprint to fast-track our growth in volumes.’

So in name at least, The former company of C.H Roe is back once again in the hands of Leyland!

Mike Humble

Upon leaving school, Mike was destined to work on the Railway but cars were his first love. An apprenticeship in a large family Ford dealer was his first forray into the dark and seedy world of the motor trade.

Moving on to Rover and then PSV / HGV, he has circumnavigated most departments of dealerships including parts, service and latterly - the showroom. Mike has owned all sorts of rubbish from Lada to Leyland and also holds both Heavy Goods & Public Service Vehicle licences, he buys & sells buses and coaches during the week. Mike runs his own automotive web site and writes for a number of motoring or commercial vehicle themed publications

41 Comments

  1. Interesting read there, Mike. Good timing seeming as they’ve just got the Sherburn factory up and running.
    Looking forwards to seeing how the story pans out 🙂

  2. Going back in time!

    In 1989/90 I did a years work experience with Plaxton Group who owned Reeve Burgess at that time. Don’t Optare manufacture MIDI buses similar to Reeve Burgess?

    Plaxton also owned Coleman Milne – remember seeing some interesting 800 based funeral cars.

  3. One intriguing aspect of the Optare story is that the CEO – Jim Sumner – who formerly ran Leyland Trucks – shares his name with James Sumner who co-founded Leyland Motors back in the 1890s. [http://www.lancashirepioneers.com/sumner/biog.asp ]

    Are they related? Or is it ‘nominative determinism’ – did he go into the business he’s in because of finding out, early on, that he shared his name with a famous industrial pioneer?

  4. Very interesting feature, good news for Optare staff, least that the “leyland ” name is still be around, Daf trucks howver droped the the Leyland name fron their trucks not so long ago. Regards Mark

  5. “I wonder if this will herald a return to the Leyland name appearing on buses in this country…”

    Posting all about this in the Forum. The leyland bus name is owned by Volvo.

  6. It’s nice to see Ashok Leyland doing so well. I was surprised some years ago to see a BMC badged coach in the UK, having no idea at the time that the former BMC plant in Turkey has gone from strength to strength. It’s also gratifying that Ashok Leyland is part of the Hiduja group, which is headquartered in London. So it is almost a British Leyland!

  7. A local bus company (Wrexham) run a couple of BMC busses for schools, sadly done in yellow to like the yellow American school busses.

  8. I suppose it is likely that Optare will continue to trade as an autonomous company, but if it were to either be re-branded or used to import Ashok Leyland into the UK, we could well see the ‘swirly L’ back on British roads (if that doesn’t upset Volvo). They certainly use it on their current product range (http://www.ashokleyland.com/). They even have bus chassis called Lynx and Cheetah!

  9. Alexander Dennis put in a bid to buy the UK shareholding in late December from Ashok Leyland, but less than 24 hrs later withdrew the bid when they realised how much of the company Ashok Leyland now owned. The factory at Sherburn is way too big for current demand for Optare products, so I have a sneaky feeling that Ashok Leyland may try to tender for MOD contracts, and use Sherburn as a CKD plant. Optare have also announced that the original Solo is to die this summer.

  10. Ashock Leyland will have to get to grips with the poor reliability and flimsy interiors that blight current Optare products. Their after sales service is also very poor .

  11. Just would like to correct a couple of inaccuracies within this article. Firstly, Alexander Dennis Limited (ADL) never actually made an offer to buy Optare. It only asked to see the books with a view to making a potential offer. However, when Ashkok-Leyland confirmed it would not be willing to sell it’s original 26% stake at any price, ADL declined to proceed. So, there was never an offer from ADL to be knocked back by Optare’s shareholders. I also don’t quite see the releavance that Brian Souter, in a private capacity, is an ADL shareholder being regarded as “infamous”. Who he invests in is his business but at the same time his investment, along with others, in buying ADL from the wreckage that was Transbus International secured secured many UK jobs. So for that on its own, he should be applauded.

    Secondly, had ADL made an offer, it would have been made in cash to buy the business, which would have represented a far better deal to Optare’s shareholders. In all likeliehood, had ADL made an offer, it would have been accepted quite whole-heartedly. If you don’t believe me see what happened to Optare’s share-price when ADL indicated and then withdrew.

    Thirdly, the fact that 99.9% subsequently accepted Ashkok-Leyland takeover was down to the fact that if they did not, Optare would have ceased trading. Their cash-flow position was that bad. It was a bit of a no-brainer.

    To be honest, I don’t really understand the positive spin being put on the fact that another British company is passing into foreign ownership, albeit one that was many moons ago part of BL. Yes we could have been left with another Transbus International scenario had ADL bought Optare but I suspect that the reason for ADL’s interest was its new manufacturing facility. Despite Optare’s boasts that it would become Britain’s biggest manufacturer of buses it was never a serious competitor to market leaders ADL and Wrightbus or even Volvo or Scania or VDL Bus (DAF of blessed yore).

    What I can see happening though is eventually Optare will turn into a sort of finishing shop, the same as MCV (Marshall of Cambridge), with most of the work being transferred to India and the Leeds facility being reduced to cleaning windows and screwing on Optare badges on pre-assembled bodies. I hope I’m wrong but I feel this deal will see the end of the Optare name. Maybe not now but at some point in the near future. Given Optare was an industry leader in term of design, with bodies like the Citypacer, Delta and Spectra, it will be a sad day when it comes. However, recent reliability of Optare products – I recall Blackpool Transport having to return an entire batch of buses they bought from Optare to be replaced by new ones, they were that bad – it at least secures jobs for the moment. It had been loosing market share and with the exception of tour buses has not built any deckers in the main London market for several years.

    Finally, Volvo Bus, who bought Leyland Bus, won the rights to the Leyland Bus name in the United Kngdom but only the original Leyland Scroll identity. The “flying plug-hole” stopped being used on Leyland buses in the early eighties with the Titan so I don’t see any reason why that could be used.

  12. “I feel this deal will see the end of the Optare name.”

    Personally i don’t really see that as a big deal, Optare isn’t a particularly historic or even long lived name, so no great loss. If they’re associated with shoddy workmanship, then perhaps it’s a good thing!

    “To be honest, I don’t really understand the positive spin being put on the fact that another British company is passing into foreign ownership”

    Well it has to be more positive than a British Company ceasing trading? You summed that up yourself.

  13. Scott, whereby I respect your views and thoughts

    Mr Souter only invested as a result of him looking after his own interests, IE: running a huge number of Alexander products on their fleet, to rid the market place of competition and to ensure a degree of control / influence of the pricing of vehicles.

    Any notion of him doing so simply to look after Jobs at Falkirk or indeed Scarborough, is rubbish.

    The board of ADL aproached Optare who in turn, asked their own shareholders who said no. And the story came via an Optare press release and the story was also run in bus and coach buyer magazine.

    Any inacuracies of such article are therefore, not mine. On the subject of Optare product quality, it would be fair to say that ADL products are no better. The Enviro shakes rattles and bangs consequently falling apart. The quality compared to a Pointer Dart for example is like chalk and cheese which incidentally was sacrificed to the advantage of the Falkirk plant.

    Dennis products are now purely just buses following the Javelin ceasing production a short while ago – which to be fair was NEVER going to be any real threat to Volvo B10 / B12. And as for that rear engined horror with a Cummins M11 engine they also axed a while back – an utter shambolic product that was a nightmare to sell.

    Hopefully Optare will never become another MCV – a company who sacked its entire sales force and then pannicked, re -employed them, and then erm, got rid of them again.

    An alliance with Plaxton and Optare? now that would be interesting and I wonder if Ashok may in turn one day turn tables and make an offer to ADL for the Scarborough works.

  14. @20 very true about Enviro.. i was speaking to one of the bus drivers of NXWM and on Route 23 (quite a tough one due to it’s hilly nature) they are testing series-hybrids based on the 4.00 design and he said that they were having numerous problems with them compared to the Volvos which ran almost like clockwork, made much less engine noise on take up, and were virtually silent during regenerative braking. His desription was “like they were floating on air.”

    by no means are ADL bad products but Volvo seems to have the edge when they screw things together properly.

  15. I’m still laughing at Simon (comment 18)

    Obviously, you don’t see the relevance or irony of the top man of England’s 2nd biggest bus operator being a major shareholder of his biggest supplier?

    Berk

  16. Mike (20)
    ADL now own Plaxton, indeed they’ve moved some work to Scarborough, with the E200 moving (ironically after the Pointer was moved to Scotland), and have even started making some E400s there, the first double deckers buses ever made at Scarborough.

    Optare have made some strange decisions, they deliberately stopped bodying over people’s chassis, so that you can’t now buy the (ex East Lancs) Olympus bodied Volvo open toppers, so Arriva are now buying some Chinese open toppers instead.

  17. So Optare is 75% owned by Leyland Ashok, the remaining 25% is still British for now (although I’m sure that Leyland Ashok will want that too)

    The long term future I would agree is almost certainly going to be that of SAIC owned MG motors, that is a glorified PDI plant, sad really but in anycase Leyland Ashok is owned by Hinduja Group which is a British Company, or at least located in the UK.

    Oh well, it’s the way things are when your industrial base is so eroded and confidence amongst the business community is so low, still I always maintain that the future is fickle and when you think you know the outcome for sure you are often surprised.

  18. Mike(20)- please forgive me if you felt was having a go at you as was not my intention. The points I was making was based on the press releases available on the ADL website, which was the same information released to the stock exchange in accordance with the Takeover Code. These stated that when ADL made the request for access to Optare’s books on the 23rd December 2011, they were rebuffed due to the fact that Ashok Leyland would not agree to sell it’s stake in Optare “at any price”. Given that, Optare declined to supply the requested information so ADL felt could not proceed. But it never got as far as making an offer for the Optare. That was the point I was making. So apologies for any misunderstanding. I guess it’s just up to which press releases you believe.

    The quality of ADL’s buses – well I suppose such things are a matter of personal opinion but as a regular traveller on various makes of vehicles, I don’t really notice any specific flaws with the Enviro range. Indeed, I will say that Lothian’s new Enviro 400H buses are stunning and very well built. At the same time the worst bus I travelled on was a Scania/Wrights of First Edinburgh which was in an appalling state. So it may be down the the individual operator. At the same time, I don’t think given the level of choice now within the market, that ADL would be doing so well if its vehicles were poorly made.

    The Pointer Dart was transferred to Falkirk during the Transbus debacle. But these vehicles made at Falkirk were no worse than vehicles made at the Plaxton plant previously. Indeed, some operators said they were better built post-Falkirk. But again, that might be solely subjective to the operators concerned.

    The coach you make reference to, the Dennis R-series, probably is worthy of an article on it’s own. Sharing the same name as a Ford coach of the 1970’s, it was meant to replace the Javelin and was conceived at a time when it looked as though Dennis and Plaxton would merge, but Alexanders, through it’s parent Mayflower, got in first for Dennis. It never stood a chance against the established players and indeed the Javelin ended up outliving it. If I seem to recall there were also plans for a smaller engined version sold through Dutch bodybuilder Berkhof but it was torpeoded after a very small number when Volvo took over distribution of Berkhof bodies in the UK. Perhaps you can confirm Mike??

    At same time, apart from the smaller van derived minibus coaches Optare was never a serious player in coaches. I would agree with Mikey that Optare has made some really strange decisions recently (Solo Plus, Rapta) and to decide not to body third party chasis was very wrong. Indeed, the Big Bus Tour Company would not have bought Chinese vehicles as a result.

    Finally Matthew (22) – as I stated earlier Sir Brian Souter holds an investment in ADL in a PRIVATE capacity. As has been pointed out repeatedly by Stagecoach, any dealings between them and ADL are at arms length. Indeed, a recent order for ADL vehicles was held whilst the relevant authorities checked and were ultimately satisfied that was the case. I’d also hardly feel that Stagecoach competitors would buy ADL vehicles if they felt they were supporting a rival. Furthermore, I hold shares in various companies?? Does that mean I’m not allowed to trade with them, as it’s a conflict of interest??

    Still, I’d rather be a berk than an idiot.

  19. I’m not entirely sure why this acquisition is being met with such premature gloom. Obviously it is possible, as Michael (24) eloquently says, that Optare could become an SAIC/MG type “glorified PDI plant”, but it could also become another Tata/JagLR style miracle cure. Time will tell, but I’m hoping it is the later.

    And Frankie (17), Leyparts, some thinly disguised Ford Cargos on their website and some split-screen trucks that I’m sure I recognise from somewhere – just can’t think where, unless they just remind me of the Foden Fleetmaster.

  20. Arghhhh Foden… now that is an entirely new subject matter.

    Someone mentioned DAF … which i believe is now part of Paccar of the USA if i am not mistaken?

  21. The Empire Strikes Back – sorry, I couldn’t resist it… 🙂

    Seriously though, if Ashok Leyland does for Optare what Tata has done for JLR then Optare should have a bright future ahead of them.

  22. Indeed some ex-Leyland trucks are now sold as Peterbilt 210 and 220!

    Ashok Leyland sell an ex-Ford Cargo which is also sold as a Freightliner.

    The old Mercedes Sprinter was sold as a Freightliner for a while too.

  23. And this makes me reflect how good it would be to have an AROnline style site dedicated to the former Leyland Truck and Bus Divison. I cut my teeth as an apprentice with Wadham Stringer Commercials and find this stuff is still in the blood. There are enthusiast sites, of course, but I’ve yet to find one that is as honest and informative about the products and company as this site is about the car divisions. Or is there one I’ve not yet found?

  24. Another British company passing over to foreign hands by fickle shareholders – not sure if it’s such a good thing.

  25. “Ashok Leyland sell an ex-Ford Cargo which is also sold as a Freightliner.
    The old Mercedes Sprinter was sold as a Freightliner for a while too.”

    It uses the Ford Cargo cab, but it’s bolted to a Leyland Chassis.

    The Mercedes Sprinter (old and new) are sold in the US under the Dodge and Freightliner brands. Dodge are part of chrysler who mercedes use to own and they still have an agreement to sell the van in the US as dodges. Freightliner as i understand it is the US subsidiary of Mercedes Trucks. Commercial vehicles aren’t sold under MB brand in the US so as not to cheapen its premium status. It’s apparently common for Dodge owners to buy a merc grille from europe and fit on their vans though.

  26. @ Dennis 32 – MB owned Chrysler and did market the Sprinter via Dodge truck dealer chain (now renamed RAM) but after the MB-Chrysler split MB market the Sprinter themselves, previously they did market the Sprinter as a Frightliner See:

    http://en.wikipedia.org/wiki/Mercedes-Benz_Sprinter

    and

    http://www.mbsprinterusa.com/

    @Charlie Keene 26 and 30 I hope that too (Optare becoming a Tata-JLR success) but with seeming all manufacturing heading east I doubt that the new owners will invest in manufacturing in the UK, I fully believe that the R&D will remain in the UK for the short to medium term at least, long term who knows.

    I also would enjoy a Leyland Bus and Truck site… do any other ARONLINE readers agree? If they do perhaps ‘we’ can come up with some thing to add to the site…

  27. I like to see the following:

    Cambridge/Oxford Development story
    Minor Development Story
    Anything on the “original” pre-war Leyland cars

  28. “but after the MB-Chrysler split MB market the Sprinter themselves”

    I stand corrected then, however Daimler Chrysler split in 2007, yet the new model was still sold after this by Dodge. Apparently the MB branded models weren’t sold in the US until 2010.

  29. wow, a Cambridge/oxford story would be great, if anything it’s probably one of the most significant cars in ‘The Firm’s’ history – in one (or several) form(s) or the other. Everyone’s seen one under whatever badge but effectively it’s one major car. Good idea.

    By the way, the guys back at NXWM are back testing Enviro 400 hybrids using the Volvo running gear again. The drivers are enjoying them.

  30. If you look you will find alot of British car companies that died a death ‘years ago’ are still going strong. Alvis is one example.
    Its not surprising that some outgrowth of the cancerous polyp that was British Leyland ended up in India – its also unsurprising that given the current rusting edge of the beginning of the art that most British companies have managed for the last 30 years – that this offshoot has returned to its native land.
    On the subject of quality. The better something is, the longer it will last but nothing lasts without good maintenance. Theres a saying that you ‘cant polish a Marina’ but good maintenance can, for a while at least, replace good inherent quality.
    I’ve had the joys of the local public transport system since I was a kid, and to be fair the different companies varied on how they looked after their equipment – but the underpowered, Belsen-esque, single deckers that Headinghams used to run on the schools service should have been retired before they were even built.
    People also forget that these vehicles do astronomical mileages – alot of which is stop/start which hammers everything.
    Personally I think its a good thing there is a Leyland still clattering along somewhere in a cheerful cloud of blueish smoke. Maybe this time they’ll get it right and go from strength to strength not from strikes to shut…

    Its not really ironic at all that the biggest bus boss wanted to secure his biggest supplier – its called business sense… and while being a big snuggly Strawberry Shortcake* was probably not #1 on his to do list, it bears saying that a happy side effect would have been securing jobs in said supplier…

    *see Drawn Together (not in front of the kids!)

    In other news – I was in an ALDI store today – *all* their managers were there for the whole UK – and every single managers company car was a black AUDI A4 bar one – that one was silver. When was the last time Rover products had that sort of penetration?

  31. “If you look you will find alot of British car companies that died a death ‘years ago’ are still going strong. Alvis is one example.”

    They’ve been building Tanks and Armoured cars for years, it was later renamed BAe Land Systems, a year or two ago they sold the Alvis name along with drawings and IP to the cars to an enthusiast company, who are now able to produce parts.

    It depends what you mean by car company though, i mean some say BMW own Rolls-Royce, however Rolls-Royce PLC build just about everything except motor vehicles.

    Alvis Cars can hardly be described as still going strong, seeing as they effectively just became part of BAe Systems. It’s a bit like saying James Starley’s Cycle company is still going strong, i mean when was the last time you saw a ‘Rover’ Safety Bicycle in a shop? See Plenty of large 4×4 vehicles with Land-Rover on them though.

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