Greyhound Corp. to Sell Most of Its Bus Business : Group Led by Former Trailways Executive Offers Deal Worth More Than $350 Million

Greyhound Corp., after more than 70 years in the bus business, announced Tuesday that it will sell almost all of its Greyhound Lines bus operations to a Texas investor group for more than $350 million in cash, securities and royalties.

Greyhound, which owns a large number of other businesses including the operation of two cruise ships, a string of pizza takeout restaurants and the manufacture of Brillo pads and Dial soap, had threatened to sell or liquidate its bus operations if it was unable to obtain substantial concessions from its drivers and mechanics.

The fortunes of Greyhound, headquartered in Phoenix, turned radically for the worse when U.S. airlines were deregulated in 1978, making it possible for low-cost, non-union airlines such as People Express to compete successfully with intercity bus lines. Then came the Bus Regulatory Reform Act of 1982, which cleared the way for hundreds of new bus lines to enter the industry and move in on the charter and tour business and to compete on intercity routes.

In the late 1960s, more than 70 million passengers traveled on Greyhound’s intercity buses, a figure that has dropped to little more than 30 million.

The new owners are headed by Fred G. Currey of Dallas, former chief executive of Trailways bus lines, Greyhound’s major competitor. They intend to continue to use the Greyhound Lines name and the sprinting dog, its famous logo, even though Greyhound Corp., the bus line’s present parent company, will retain its name.

The deal is expected to be closed by mid-March, and Greyhound Corp. said it would continue operation of its 3,100 buses without change in schedules or routes until then.

Currey is chairman of BusLease Inc., which owns and manages a fleet of 1,100 intercity buses. Associated with him in the bus lines purchase announced Tuesday are Craig R. Lentzsch, president of BusLease, and P. Anthony Lannie, executive vice president of BusLease.

Not included in the sale are three other Greyhound Corp. bus operations: Greyhound Lines of Canada; New England Transit Co., a Northeast bus operator, and Texas, New Mexico & Oklahoma Coaches, which operates bus lines in the Southwest.

John W. Teets, chairman and chief executive of Greyhound Corp., said in a telephone interview Tuesday that the Currey group had made the best of four offers, at “a price we are very excited about.” He declined to identify the three other bidders.

The chairman said that Greyhound, with Currey in the driver’s seat, would be run by a “seasoned veteran.”

Analysts said they were not surprised that Greyhound carried out its threat to sell the bus operations but that the company received a higher price than had been expected. “We were pleasantly surprised with the price,” said Katherine M. Stults, an analyst who follows the company for the New York brokerage house of Dean Witter Reynolds.

Commenting on a study made a few years ago that showed Greyhound to be among the three best-known names and trademarks in the world, along with Coca-Cola and Kodak, she said: “It may be part of the lexicon of America--but America wasn’t using it.”

Warnings Were ‘Misread’

The company was founded in the mining town of Hibbing, Minn., in response to a need to transport workers from the town to the mine. Two businessmen started the company, first called Mesaba Transportation Co., using a seven-passenger 1914 Hupmobile. The firm became Greyhound in the late 1920s, moved its headquarters to Chicago in 1929 and shifted to Phoenix in 1971.

Teets said that if the members of the Amalgamated Transit Union had ratified an agreement that the company had negotiated with the union leadership, “we would have kept the bus operations.” But Teets said his repeated warnings that the bus operations would be sold if the union did not agree to concessions were not taken seriously. The warnings, he added, “were always misread.”

The union, which represents more than 6,000 Greyhound employees, agreed in 1983 to a 15% wage reduction, ending a violent, 47-day strike against the company. This year, the union leadership endorsed a proposed contract that would have reduced wages by 9% and benefits by 5%, but the pact was rejected by the rank and file.

Officials at the union’s national headquarters in Washington said Tuesday that the organization would make no public statement on the Greyhound sale until after Christmas.

But Harold Mendlowitz, president of the union’s Local 1202, which represents Greyhound workers in the Northeast, told Reuters news agency that the union felt that the company had wanted to get out of the bus business for some time and wanted to blame the workers for the sale. He said the employees accepted $40 million worth of concessions in 1983 and that Greyhound used the money to buy Purex Corp. instead of putting the money back into the bus lines.

Mendlowitz said that if the new owners did not bargain with the unions, they would “have a fight on their hands.”

But Currey was quoted as saying: “We hope to have early visits with employees. We have no plans to negotiate. We only have plans to visit.” He added that no layoffs are planned. If anything, he indicated, more employees would be added. Dick Simpson, vice president of the union’s Local 1222, which represents Greyhound workers in Arizona and Southern California, told the Phoenix Gazette: “We thought we’d be better off with a new owner anyway, so we don’t look at it as a bad thing. . . . We’re looking forward to hearing what this new guy has to say.”

The bus lines are part of Greyhound Corp.’s transportation services division, which accounted for 26% of the parent firm’s revenue in 1985.

In reaction to the sale announcement Tuesday morning, Greyhound’s stock rose $1.75 a share during the day to close at $31.875.