Ashok Leyland acquires 26% in UK's Optare

Ashok Leyland would acquire a 26 per cent stake in Optare plc, a UK-headquartered bus manufacturer, for $7.5 million (Rs 28 crore). The company is expected to get three kinds of benefits from this acquisition. First, it will participate in the growth of the European bus market through Optare. Second, it will have access to the products and technology of Optare, which could be (where necessary) modified and brought into India. Third, Optare and Ashok Leyland will jointly develop products and hold the intellectual property together.

Optare is a $125 million company. In the last couple of years, it has not made profits, Europe being in recession. Ashok Leyland will be issued fresh shares for its 26 per cent stake. The other 74 per cent is owned by investors and Ashok Leyland will be given preference should they intend to offload their stake. The $7.5 million that Optare will get will be used to pay down debt, and in new product development.