FIRSTGROUP, the FTSE100 transport behemoth, has put its rail freight haulage business up for sale in an attempt to reduce its £2.3bn debt pile.
Potential buyers for GB Railfreight are understood to include Groupe Eurotunnel, the operator of the Channel Tunnel, British outfit Freightliner and French railway network SNCF.
FirstGroup has grown steadily through a series of bolt-on acquisitions over the past 20 years. It took on GB Railfreight in 2003 when it paid £24m for GB Railways, the AIM-listed operator of Hull Trains.
FirstGroup initially said it wanted to hold onto the rail freight unit. But it is understood the arm was put up for sale due to fears over FirstGroup’s heavy leverage – the legacy of its $3.6bn (£2.4bn) takeover of US Greyhound bus runner Laidlaw International in 2007.
The move comes after a spate of consolidation in the European rail freight sector. Last year SNCF snapped up the German, Dutch and Italian parts of Veolia Transport’s cargo division, while Eurotunnel took on the French parts. Eurotunnel is believed to be particularly interested in GB Railfreight. It has made no secret of its desire to expand its rail freight arm, Europorte 2, and is said to be a natural partner for GB Railfreight.
Like other transport operators, FirstGroup took a battering from the recession and the unusually cold winter. It is trying to make £200m of cost savings by cutting bus and coach services on less popular routes. Spokespeople for FirstGroup and Eurotunnel declined to comment.