Stagecoach chief defends offer for Citybus Group as reasonable

Scotland-based transport company Stagecoach Holdings yesterday strongly defended its general offer for Citybus Group shares, a takeover which some Citybus minority shareholders have called unfair.

At the opening of a Citybus depot on Lantau Island, Stagecoach chairman Brian Souter said the group was offering a fair and reasonable price for Citybus, as stated by Citybus independent financial adviser, Somerley.

A group of minority shareholders holding more than two million shares say they have complained to securities regulators about the offer price.

Stagecoach is extending its offer of $1.95 per Citybus share until April 7 after securing 86.16 per cent of the company.

The price values all of Citybus at $2.3 billion. The shares closed yesterday unchanged at $1.93.

Stagecoach finance director Keith Cochrane denied an allegation by minority shareholder Peter Crush that Somerley's warning of possible rights issues and equity fund-raising exercises by Citybus was 'intimidating' minority shareholders to accept the offer.

A report by Somerley recommended shareholders accept the offer, pointing out risks linked with franchised Citybus routes, its need to reduce a gearing ratio of 121 per cent and an attractive offer price compared with market prices in January.