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July 28, 1999 11:36 AM, EDT

Ryder System agreed to sell its public transportation service unit to FirstGroup PLC, the United Kingdom’s largest bus operator, for $940 million in cash.

Ryder said it would use the proceeds to buy back stock and to invest in its remaining businesses, which consist of third-party logistics services and truck leasing and rental.

Chairman M. Anthony Burns said the sale will allow the Miami-based company to improve its credit ratings and provide funds for working capital and other “prudent” capital investments.

Ryder management has been under pressure in recent years because of its lackluster stock performance and inconsistent earnings.

In September 1997, the company sold its large but highly volatile automobile transport business to Allied Holdings. Last year, Ryder formed a partnership with IBM and Andersen Consulting to bolster its information technology services.

Ryder Public Transportation Services generated revenue of $582 million in 1998, accounting for about 11% of total revenue for Ryder. The business operates buses for more than 475 school systems in 26 states, and provides management and maintenance services for public transit systems.

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