FirstGroup, the bus and train operator, is issuing up to 43.7 million new shares to institutional investors to help pay for the $3.5 billion purchase of US transport group Laidlaw, which operates the 92-year-old Greyhound bus network. The deal was completed in last October.

The shares are being placed in a book-building exercise arranged by JP Morgan Cazenove, in which institutions bid for them and this sets the actual price.

At last night's closing price for FirstGroup they would be worth about £260 million. The placing will involve shares worth a maximum of 9.99 per cent of FirstGroup's current share capital. FirstGroup said the placing was expected to raise between £230 million and £240 million.

The company bolstered the cash-raising exercise with the issue of financial results for the year to end-March that showed adjusted pre-tax profits ahead by 27 per cent to £249.0 million.

Chief executive Moir Lockhead said the year had seen further strong performance across all businesses.

In North America, the integration of Laidlaw was making good progress and was expected to offer annual cost savings of $150 million from April 2009. A final dividend of 11.55p makes a total increased from 15.5p to 17.05p.

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