Ryder System has announced that it has signed an agreement to sell its Ryder Public Transportation Services (RPTS) Group to FirstGroup plc for $940 million in cash.
Ryder expects to realize net after-tax proceeds of $670 million, and will use much of it to retire debt and focus on its leasing and logistics businesses, analysts said. RPTS consists of Ryder Student Transportation Services, the second-largest student transport provider; Ryder/ATE, the second-largest U.S. provider of public transit management and operations services; and Ryder/MLS providing fleet management and maintenance services for municipalities, transit authorities, public utilities and other companies.
FirstGroup is a diversified multimodal public transport operator. Its interests lie mainly in the UK but recently it set up a bus joint venture in Hong Kong, called New World First. That venture won a £80 million (US$140 million) contract to run bus services in Hong Kong; it also plans to build or buy 600 new buses over the next two years.
FirstGroup was also selected as preferred bidder for the £50 million (US$83 million) City of Edinburgh Rapid Transit, which will involve the construction of a 9km (5 mi) guided bus-way between the airport and the city center. The company acquired Great Western Trains for £148 million, a controversial deal because it is expected to generate a huge profit for the former British Rail managers who bought Great Western, one of the train operating companies established as apart of British Rail’s privatization.
FirstGroup is also actively seeking other bus, train and airport acquisitions in North America and mainland Europe. It reportedly is under pressure from shareholders to maximize non-UK opportunities since revenues within its home country have been flat.