FirstGroup to Buy Greyhound Bus Firm for $3.6 Billion
Britain's biggest bus company FirstGroup said on Friday it had agreed to buy Laidlaw International, the U.S. operator of iconic intercity Greyhound buses, for $3.6 billion including debt.
FirstGroup said it would pay $35.25 for each Laidlaw share, an 11% premium to Thursday's closing price, in a deal that will also make it the largest operator of yellow school buses in the United States.
It will pay for the deal in part with a placing of shares to raise 200 million pounds ($393 million), it said in a statement.
"FirstGroup's acquisition of Laidlaw will considerably enhance the group's existing activities in North America, which themselves have grown strongly since we first invested in the U.S. in 1999," First Group Chief Executive Moir Lockhead said.
FirstGroup shares were down 0.3% at 559-1/2 pence, valuing the firm at about 2.2 billion pounds.
FirstGroup is already one of the biggest operators of student buses in the United States after it bought Ryder Public Transportation Services in 1999 for $940 million, and the Financial Times and Daily Telegraph newspapers warned this latest deal could attract scrutiny from competition authorities.
The Financial Times also said the International Brotherhood of Teamsters, which represents many school bus drivers, had vowed to oppose the deal.
FirstGroup said it expected the acquisition to generate about $70 million of annualized pre-tax cost savings and to boost earnings, both in the first full year of ownership.
It said the debt portion of the deal would be financed through new debt facilities of $3.75 billion.
The equity portion of approximately $750 million, which is supported by an equity bridge facility of that amount, will be financed from the 200-million-pound placing and a subsequent equity issue of approximately 175 million pounds, which is expected to take place shortly after completion of the deal.
Last month, Laidlaw reported a lower quarterly net profit, citing fewer bus passengers on its Greyhound Lines, which criss-cross North America, due to fare hikes.