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Greyhound bus service might be put up for sale

The iconic U.S. transit company's new owner, FirstGroup, is reviewing its options.

February 10, 2007|From Bloomberg News

Greyhound Lines Inc., the biggest U.S. intercity bus company, might be put up for sale now that parent company Laidlaw International Inc. is being acquired.

FirstGroup, Britain's biggest train operator, said Friday that it would combine Laidlaw's fleet of 41,000 school buses with its own Ryder U.S. school bus unit.

Greyhound is a "less obvious strategic fit" and will be reviewed, FirstGroup said in announcing its $3.6-billion purchase of Laidlaw.

A sale of Dallas-based Greyhound would end eight years of ownership by Laidlaw, whose student bus operations are the largest in the U.S. FirstGroup gave no timetable for its review.

"You would hope they're more committed to keeping 100% of what they've bought," Alistair Gunn, an analyst at Arbuthnot Securities Ltd. in London, said of FirstGroup. "It wouldn't surprise me if they did retain Greyhound, and if they don't they'll get a good price for it."

Greyhound serves about 2,200 destinations and has been the largest U.S. bus company since the 1950s.

The business, founded in 1914, diversified in the 1960s and '70s, owning stakes in the company that made Dial deodorant and a meatpacking operation.

Laidlaw Chief Executive Kevin Benson, asked at the company's annual meeting Friday about a possible Greyhound sale, said the bus operator had rejuvenated its brand by overhauling terminals, improving customer service and refurbishing its fleet.

"The question used to be 'Would Greyhound survive?' Now it is 'What's next?' " Benson said.

School transportation services generated 79% of pretax first-quarter income for Naperville, Ill.-based Laidlaw; Greyhound accounted for 18%.

"What's new in this transaction is the Greyhound business," FirstGroup CEO Moir Lockhead told analysts in London. "We'll do the strategic review and then we'll take it from there."

Shares of Laidlaw rose $2.86, or 9%, to $34.58.

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