FRENCH consortium C3D has increased its hostile bid to take control of North-East bus and train group Go-Ahead.

C3D, which consists of French transport group Caisse des Depots-Developpement and financier Rhone Capital, said it had held talks with Go-Ahead's management to seek backing for a raised cash bid of 800p-a-share, rather than current 650p-a-share bid.

An 800p-a-share bid would value Go-Ahead at around £402m, and was designed to tempt Go-Ahead's board into recommending the offer to shareholders.

But Go-Ahead's management rejected the new approach, as they had the £326m bid, saying it undervalued the company.

Go-Ahead non-executive chairman Professor Sir Frederick Holliday said: "Go-Ahead has exciting prospects as an independent company and has the strong balance sheet enabling it to take advantage of the opportunities available to the group."

As a result, C3D said it had decided to extend its existing 650p offer to October 25, the same day that the Shadow Strategic Rail Authority will make a decision on awarding the franchise for the South Central railway line, which Go-Ahead is bidding to take over from Connex.

South Central primarily operates commuter services from London to Surrey, Sussex and the South coast.

Attention will now focus on French state-owned railway operator SNCF, which is Go-Ahead's partner in its bid for South Central, and has said it could make a rival bid.

Analysts have predicted, should Go-Ahead be awarded the franchise, it could boost its share price by as much as 200p.

lBus users face yet another day of disruption today after drivers rejected a revised pay offer.

The drivers, who work for Go Gateshead, staged a one-day strike last week after rejecting a four per cent rise.

Bosses offered improved overtime and bank holiday pay after six hours of talks on Monday.

The transport union TGWU said the revised offer had been rejected by its members. Drivers are holding out for at least a five per cent pay rise.