FirstGroup seals deal to offload iconic US Greyhound business to focus on UK

Scottish transport giant FirstGroup has sealed a deal to sell its US Greyhound Lines business to Germany's FlixMobility more than two years after putting the operation up for sale.

Investors have welcomed the deal worth $172 million (£125m) with the European coach and rail group. It comes as part of Aberdeen-headquartered FirstGroup's move to focus on its UK transport business, having already offloaded its US school and public service bus operations First Student and First Transit.

The Scots group has been looking to sell the iconic Greyhound business since spring 2019 amid pressure from activist investors, but the process was impacted after the division took a knock from falling demand during the pandemic.

First said it will retain Greyhound properties, worth some $176m and lease them back to Greyhound, with plans to sell them after the next three to five years.

The Greyhound coach brand is one of the world's most iconic transport names. Picture: Dominic Lipinski/PA

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.”

Jochen Engert, founder and chief executive of FlixMobility, added: "The continuous expansion of our network through partnerships and acquisitions has always been an integral part of our growth strategy to build our global presence.

“The acquisition of Greyhound is a major step forward and strengthens FlixBus’ leading position in the US.”

FirstGroup has been in the activist investor firing line in recent years, with chief executive Matthew Gregory departing last month after less than three years in the post and in the wake of demands for his resignation from the group's biggest shareholder.

New York-based hedge fund Coast Capital made a call in July for Gregory, and two non-executive directors, to step down after it said the multi-billion-pound sale of First Student and First Transit in the US was too cheap and poorly timed at the peak of pandemic disruption.

Gregory denied his planned departure was due to pressure from Coast Capital and insisted the deal was at a "good price".

Last month, FirstGroup, which is also behind the new Lumo east coast open access rail service connecting Edinburgh and London, outlined its plans to return £500m to investors after confirming that current trading remained on track.

In a trading update released to coincide with its annual shareholder meeting, the firm said bus passenger volumes had reached 65 per cent of pre-pandemic levels on average in recent weeks. It expected this to increase further as the autumn terms for schools and then universities get fully underway.

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