Greyhound Lines Inc. agreed to be acquired by Canada's Laidlaw Inc., North America's largest ambulance and passenger bus company, for about $470 million.
Laidlaw, which already owns Greyhound Lines of Canada, will pay $6.50 a share for Dallas-based Greyhound, valuing the stock portion at about $470 million. That's a 33% premium to Greyhound's price of $4.88 on Friday. Laidlaw also will assume $180 million in Greyhound debt.
News of the deal sent Greyhound shares up 81 cents, or 17%, to close $5.69 on the American Stock Exchange. Laidlaw's U.S.-listed shares were off 44 cents, or 5%, to $9.25 on the New York Stock Exchange.
Greyhound, for 85 years one of the few travel options available linking small towns to larger cities, survived brushes with bankruptcy to become the U.S.' only long-distance scheduled bus service.
"Laidlaw has much better credit than Greyhound," said Eric Beder, an analyst with HD Brous & Co. who has a "buy" rating on Greyhound stock and said he will recommend that clients approve the merger.
Rosario Ilacqua, an analyst with Rothschild Inc., said it will be good for all concerned to rejoin the two bus lines, which were separated when Dial Corp. spun off Greyhound Lines in 1987.
Greyhound's headquarters will remain in Dallas and no personnel changes are expected soon. Greyhound employs 12,500 people nationwide.
Laidlaw said it will integrate its U.S. and Canadian bus operations under Craig Lentzsch, Greyhound's president and chief executive.
Greyhound expects most of its growth to come from U.S.-Mexican routes, where it is the leading carrier and where the industry is increasing 20% to 30% annually, Beder said.
The merger is subject to regulatory approval, but Ilacqua said there shouldn't be any antitrust obstacles.
"We do not expect to have any difficulties because the companies are not in competition," Lentzsch said.
Greyhound stockholders will likely consider the deal in January.