Chennai: Commercial vehicle major Ashok Leyland (ALL) has picked up a 26% stake in Optare, a UK-based bus manufacturer. The long-term strategic co-operation will involve an investment of $7.5 million and is expected to support ALL’s efforts to accelerate technology, new product development and address new markets.

ALL has been negotiating with the $125-million Optare for over a year to clinch the deal. The UK company, founded in 1985, specialises in low-floor, mid-sized buses as well as modern range of city buses.

Having operations at Leeds and Blackburn, Optare has close to 34% market share in the UK, where it competes with players such as WrightBus and Alexander Dennis. This strategic alliance will be a critical part of ALL’s global bus programme that is currently under development, ALL MD R Seshasayee said on Thursday. Optare has a capacity to produce 1,100 units per annum.

It had pioneered the low-floor, double-decker in the UK and its new electric bus product has already fetched orders, with more countries in the Europe promoting cleaner and greener mobility. The Optare Solo is a leader in the midibus sector and over 4,000 units have been sold so far. It operates in the UK, Continental Europe and North America.

ALL will have access to Optare’s technology, including a modern range of mid-size and full-size city buses, which will appeal to several global markets, Hinduja Automotive executive vice-chairman V Sumantran said.

Optare CEO Jim Sumner said (via a live video conference from the UK) that the company had been scouting for a long-term strategic partner and the new partnership will help lead the way in low-carbon designs.

Mr Sumantran said that apart from access to Optare’s current range of products, they will share IPR (intellectual property rights) on co-developed products. The two companies will also share components in various areas like those related to climate control or drive train systems as both seek to leverage on common design elements. To a query, he said this was a fresh offer and the stake was finalised at more or less the market price.

ALL has the option of raising its stake in Optare in the future. A part of the investment will be used immediately to service Optare’s debt, with whom ALL has an exclusive manufacturing agreement.