Transport giant FirstGroup has announced the sale of two of its US divisions, including its iconic yellow school bus service, to Swedish private equity group EQT Infrastructure for £3.3bn.
FirstGroup, which operates Great Western Railway and South Western Railway and city centre bus services across the UK, said it would be using the money to help reduce its debts, including the repayment of £300m in emergency loans from the UK government taken out during the Covid-19 pandemic.
The FTSE 250 firm also said it would contribute £336m to its pension scheme and return £365m to shareholders (30p per share) during the current calendar year.
FirstGroup’s share price rose by 10% in early trading following the formal announcement of the deal on Friday April 23.
Aberdeen-based FirstGroup put its US bus subsidiaries First Student, which runs 43,000 distinctive yellow school buses, and First Transit in March 2020 with the sale process subsequently disrupted by the pandemic.
In a statement, the company said the transaction reflected the strategic value of both businesses, which they said had “strong prospects” of returning to normal service after the pandemic.
It also said that public transport would play a “vital role” in rebuilding economies emerging from lockdown restrictions.
Chief executive Matt Gregory said: “Going forward, FirstGroup will be a more focused, resilient business that is in a strong position to deliver for bus and rail passengers in the UK, continue investing in its zero-emissions fleet strategy, and play a key role in meeting society’s broader ESG goals.”
FirstGroup is continuing to search for a buyer for its Greyhound coach business in the US.
