FirstGroup sees further saving from Laidlaw acquisition

Source: Supply Chain Digital

Date :07/11/2007 11:24:01

FirstGroup has raised its forecast of synergies from merging its U.S. operations with those of Laidlaw, which it bought for $2.8 billion last month.

The bus and rail firm had initially targeted annual synergy benefits of $70 million from the deal-which saw it become of the world’s biggest transport companies-giving FirstGroup the iconic Greyhound brand and a total of 63,000 school buses out of around 450,000 in the United States.

Dean Finch, chief operating officer for North America, said on Wednesday: "We're looking at synergies of $70 to $100 million, and it could be better than that. Everything we've looked at has turned out to be better than we thought."

He said the synergies would be delivered in around 18 months time and would largely come from the group's improved buying power for insurance and consumables, from back-office job cuts and from cutting Laidlaw's stock market listing.

Healthy start

FirstGroup raised its forecast for savings from its acquisition of U.S. firm Laidlaw and said it has started a review of whether to keep the Greyhound bus business that came with the purchase.

The UK based company said the second half of the financial year had started well with a 24 percent rise in underlying first-half profit to £74.5 million pounds ($155.5 million), in line with market expectations.

Revenues also rose 3.5 percent in its UK bus division in the first half and by 5.6 percent in its UK rail division.

November 7 2007