Offer Update - Closure of Acquisition and Tradi...

FIRSTGROUP PLC                                 

                  ACQUISITION OF LAIDLAW INTERNATIONAL, INC.                   

                            CLOSURE OF TRANSACTION                             
                              AND TRADING UPDATE                               

Closing of the Acquisition

Further to the announcement made on 28 September 2007, FirstGroup is pleased to
announce that the closing of our Acquisition of Laidlaw International, Inc. is
taking place during US business hours today and accordingly, we expect the
Acquisition to become effective later today. We will issue a further
confirmatory announcement at that time.

US Antitrust review process

As a result of the US Antitrust review process we have agreed to a package of
remedies resulting in the divestment of some 800 yellow school buses out of a
combined total of 62,000. As part of this agreement, further limited
divestments or contract terminations may occur. A number of potential antitrust
issues were addressed through the outcome of the most recent school bus
contract re-bid cycle where, as we anticipated, we experienced some contract
attrition due to the Acquisition. The current aggregated impact of these
outcomes represents 3% of the school bus fleet of the combined business. The
overall resulting financial impact is significantly less onerous than the
original assumptions made by us at the time of our announcement of the
Acquisition on 9 February 2007 (the "Acquisition Announcement").

Funding

The terms of our financing arrangements for the Acquisition were fixed at the
time of the announcement of the Acquisition. At that time we expected to effect
a further equity issue shortly following completion of the Acquisition. Strong
cashflows within Laidlaw since that date have reduced the level of debt
required to finance the Acquisition and have effectively reduced the
consideration to $3.4 billion. This, combined with strong cashflows in
FirstGroup, have led to a lower level of net debt for the combined group and
consequently no further equity issue will be required as part of the
Acquisition or is currently planned. We expect that the Group's credit rating
will remain investment grade.

Integration update

We have made good progress with integration planning, within the parameters of
the antitrust process, and have established a strong, experienced management
team for the enlarged business comprising both former Laidlaw and FirstGroup
America management. Dean Finch is seconded to the US to lead all aspects of the
integration and the day-to-day operations of the combined business. As
announced at the time of the Acquisition, we have commenced a strategic review
of Greyhound and with effect from closing of the Acquisition will have full
access to the business to enable that review to be completed.

Trading Update

The Group reports on trading for the six months to 30 September 2007 ahead of a
conference call with analysts.

We are pleased to report that the Group has made a good start in the first half
of the year, in line with management expectations, with a good performance
delivering strong cashflows and an improved Group operating margin.

UK Bus

Our UK Bus division has delivered a strong performance during the period with
passenger volume and revenue growth. This together with our initiatives to
tightly control costs have delivered an improvement of over 1% to the operating
margin. We continue to focus on improving service quality through investment in
people and vehicles. We are pleased to report that operating performance has
continued to improve during the period with further encouraging trends
including lost mileage now below 1%.

UK Rail

Strong revenue growth continues to be a feature across our UK rail operations.
Passenger revenue growth has increased by over 9% on a like for like basis (six
months to 30 September 2006) and this trend has accelerated in the second
quarter. We continue to make investments in our rail division that will deliver
improved services for passengers. At First Great Western we have made good
progress on a significant programme of investment to refurbish our High Speed
Train fleet, which will deliver capacity and performance uplift to that
franchise. We are on course to fully complete the refurbishment by early 2008.
Across our rail portfolio performance has continued to improve, this together
with capacity and service enhancements will provide further prospects for
future growth . In December our First TransPennine Express franchise will
commence operation of Anglo Scottish rail services which will contribute some £
10 million of additional revenue.

North America

In North America our operating margin has remained stable, despite some fuel
cost pressure during the period. We maintained our focus on rigorous cost
control and productivity improvements. We have made good progress with our
programme to install GPS equipment to our existing fleet that will deliver
safety improvements and increased efficiencies. Our Transit division has
successfully renewed a significant contract to provide transit services in
Houston.

Laidlaw

Overall trading at Laidlaw International, Inc. remains in line with their
management expectations. Education Services continues to deliver good revenue
growth and an improved operating margin. Volumes at Greyhound are beginning to
recover as a result of passenger growth initiatives. In addition, cost control
measures implemented during the period have had a positive effect.

The Group

The Board remains confident of the prospects for the Group in all markets in
which it operates and its continued strong cashflows. We have established a
leading position in the UK and North American markets and a firm platform on
which to deliver further profitable growth.

The Group will announce interim results for the six months to 30 September on
Wednesday 7 November 2007.

A conference call for analysts will be held at 12 noon BST on Monday 1 October
2007. If you wish to participate in the conference call please contact Zoe
Shaughnessy at FirstGroup: Tel: [phone] or [phone].

A presentation will be available to download at www.firstgroup.com prior to the
conference call.

An interview with Moir Lockhead, Chief Executive, and Dean Finch, Chief
Operating Officer - North America, of FirstGroup plc, can be seen at 
www.firstgroup.com and www.cantos.com.

Contacts:

Rachael Borthwick
Group Corporate Communications Director
Tel: [phone] (US business hours)

Malcolm Moir
J P Morgan Cazenove
Tel: [phone]