School Bus Transportation News at STN Media

UK's First Group to Purchase Parent Company of Laidlaw Education Services

LONDON (Feb. 9, 2007) — FirstGroup plc, the parent company of school bus contractor First Student, appears to be poised to increase it's school bus reach amid news it will purchase Laidlaw International for $3.6 billion US.

In a company release, FirstGroup said it will pay $35.25 per share, 11 percent above Laidlaw's closing stock price the day prior. FirstGroup will also assume about $800 million in Laidlaw International debt.

Laidlaw International announced in January that the company missed its forecasted first quarter earnings due in large part to revenue losses in its Greyhound transit business owed to fare hikes, network hikes and investments the company was making in Laidlaw Education Services, the nation's largest school bus contractor. Laidlaw's school bus revenue accounted for approximately 50 percent of the company's total $3.1 billion revenue for the fiscal year that ended Aug. 31, 2006.

FirstGroup said its North American school bus market share will rise to 40 percent from its current level of 13 percent.

"This transaction represents an excellent opportunity for our employees and stockholders," said Kevin Benson, president and CEO of Laidlaw. "The combination of Laidlaw and FirstGroup will bring together two well-known brands and two well-respected companies that share a very strong focus on employee and customer satisfaction. I am delighted to recommend this transaction to our stockholders."

The transaction, if approved by both FirstGroup and Laidlaw shareholders and the receipt of necessary U.S. anti-trust approvals, is expected to generate approximately $70 million in pretax savings in the first full financial year following its completion, FirstGroup representatives said. Following the announcement, First's shares on the London Stock Exchange rose 4.8 percent to 588 pence, or $11.45. Laidlaw International Inc. shares went up $2.85, a nine percent increase to $34.57 in morning trading on the New York Stock Exchange. Earlier in the day, Laidlaw's stock rose to a 52-week high of $34.75.