FirstGroup sells $172m Greyhound; retains property

Aberdeen-based transport group FirstGroup plc said on Thursday it sold its Greyhound Lines bus business in North America for $172 million to Germany’s FlixMobility, completing its stated strategy to focus on its UK public transport businesses.

FirstGroup recently completed the £3.3 billion sale of its other North American businesses First Student and First Transit to Stockholm-based investment firm EQT Infrastructure.

In the Greyhound deal, $140 million will be paid initially, with $32 million in unconditional deferred consideration paid in instalments over 18 months.

Greyhound properties with an estimated value of $176 million will be retained by FirstGroup.

The properties will initially be leased back to Greyhound at market rates but are expected to be sold over the next three to five years.

“FirstGroup also retains certain legacy Greyhound net liabilities, including pension, self-insurance, and finance leases settled at closing, which in total were valued at $320m as at 27 March 2021, as well as grant receivables, buyout premia and other items estimated at a net cost of c.$47m, against which the group had retained $197m of proceeds from the sale of First Student and First Transit earlier in the year,” said FirstGroup.

“The $140m of Greyhound initial cash proceeds will be retained by the group to support the close-out of these legacy liabilities and related net costs, with the balance of the property proceeds and deferred consideration resulting in c.$178m (c.£128m) in net value for the group being realised over time.”

FirstGroup executive chairman David Martin said: “Greyhound is an iconic business which has been at the heart of North American life for more than a century, through its unique national network which connects communities across the continent.

“We are proud of the significant developments we made to Greyhound’s business model during FirstGroup’s ownership, including the introduction of express point-to-point routes, real-time pricing and yield management and a transformed customer offering and experience.

“This transaction realises an appropriate value for Greyhound’s operations and ensures Greyhound’s legacy liabilities are suitably managed.

“Today’s agreement regarding Greyhound’s future completes the group’s portfolio rationalisation strategy which has refocused FirstGroup on its leading UK public transport businesses with a strong platform to create sustainable value going forward.”

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