FirstGroup to sell N.American bus units to EQT for $4.6 billion

(Reuters) – FirstGroup Plc agreed to sell its North American school bus and bus contracting businesses to EQT Infrastructure for $4.6 billion including debt, the UK-based transport operator said on Friday.

It began the sale process for the FirstStudent and FirstTransit businesses a year ago, following pressure from major shareholder Coast Capital Management to focus on its UK bus and train operations.

The Aberdeen-headquartered company said it plans to use proceeds from the sale to pay down debt, including UK government coronavirus aid, contribute to its UK pension schemes and return money to shareholders.

FirstGroup proposed to return about 365 million pounds ($506 million) or 30 pence per share to shareholders in 2021.

The two units being divested reported annual revenues of $3.8 billion, accounting for 60% of group operating profit, in the full year prior to the sale announcement.

FirstStudent, one of the largest school bus operators in the United States, has around 43,000 yellow school buses. FirstTransit, a private contractors of public transport services, owns or operates more than 14,000 vehicles.

FirstGroup had also announced the sale of its Greyhound bus business in the United States and Canada in May 2019 but the process stalled amid the coronavirus pandemic and is ongoing.

It operates four train contracts in Britain, including services to Bristol in the south west, and commuter services to the south of London, plus bus services in smaller UK cities and surrounding areas.

($1 = 0.7215 pounds)

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