FirstGroup set for Greyhound buses deal

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The Independent Online

FirstGroup is set to announce the takeover of the operator of the iconic American Greyhound inter-city bus service, in a deal worth around $3.9bn (£2bn).

The Aberdeen-based First Group is poised to announce an agreed takeover, possibly as early as today.

Greyhound is owned by Laidlaw International. A deal is believed to value the shares of Laidlaw at between $35 and $37, which would make the company worth between $2.78bn and $2.93bn (£1.42bn-£1.5bn).

Laidlaw's main activity in the US is operating yellow school buses. A deal would turn First, which already has a foothold in this market, into the largest single operator of school buses in the US, with about half of the total market in school buses. First's main business is running buses and trains in the UK.

However, the deal could run into problems because of antitrust investigations.

The International Brotherhood of Teamsters, which represents many school bus drivers in the US, has said it will oppose a deal.

It is understood that talks betweeen FirstGroup's chief executive Moir Lockhead and Laidlaw's chief Kevin Benson have made good progress.

First made a successful move into the US seven years ago when it acquired the school bus operator Ryder, now known as First Student, the second biggest operator in the market.

Laidlaw is based in the Chicago suburb of Naperville. Its history dates back to 1924 when a trucking company was founded in Ontario, Canada, by Robert Laidlaw.

Its story has been one of steady growth but it ran into problems and filed for Chapter 11 bankruptcy in 2001. It emerged two years later after a major restructuring, with Mr Benson in charge. Since it left Chapter 11, Laidlaw has disposed of several non-core businesses. These include a pharmaceuticals maker and a medical transport operation.

Laidlaw reported net income of $1.25m on revenue of $3.13bn in the year to the end of August last year. Greyhound services accounted for only $1.24bn of that revenue.

Laidlaw is holding its annual shareholder meeting in Naperville today.

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