Acquisition/Rights Issue

FIRSTGROUP PLC
21 July 1999


PART 1

                    ACQUISITION BY FIRSTGROUP PLC OF
               RYDER PUBLIC TRANSPORTATION SERVICES, INC
                  RIGHTS ISSUE TO RAISE £238 MILLION


The Board of FirstGroup plc ('FirstGroup') is pleased to announce the proposed
acquisition of Ryder Public Transportation Services ('RPTS') for US$940
million payable in cash (equivalent to £602 million).  The acquisition is
being part funded by a 1 for 4 rights issue to raise £238 million before
expenses and the balance by way of a new bank facility.

The board of FirstGroup believes that the transaction will:

- Provide a solid platform for growth in three expanding US markets with
estimated combined annual revenues of some US $25 billion,

- Deliver a significant presence in the US school bus and transit contracting
and management markets,

- Enable entry to the growth sector of public fleet maintenance,

- Be immediately earnings enhancing (pre amortisation of goodwill). 

RPTS is a wholly owned subsidiary of Ryder System, Inc. In 1998 RPTS had a
turnover of $582 million and an operating profit of $62.4 million.  It
consists of three operations based in the US:

- Ryder Student Transport Services ('RSTS') is the second largest provider of
student bus services in the US with a bus fleet in excess of 10,200 school
buses.  In 1998 it generated turnover of $325m. The market, which is worth
approximately $13.5 billion, continues to grow and RSTS is expected to benefit
from the ongoing long term shift to private contracting.

- Ryder ATE ('ATE') is the second largest provider of public transit
contracting and management services in the US with an estimated share of
approximately 15% of the outsourced market.  It provides services to more than
74 customers in 30 states in the US.  Turnover in 1998 was  $197 million.  The
directors believe that this market is worth some $7.5 billion and is expected
to grow by 4%-5% per annum over the next three years.  Private firms are
believed to have only 20% penetration.

- Ryder MLS ('MLS') is believed by the directors to be the largest provider of
public fleet maintenance services in the US. It serves 75 governmental
entities and private companies and manages and maintains approximately 30,000
pieces of equipment. Turnover in 1998 amounted to $142 million, including
intersegment eliminations of $83.0 million.  The directors believe that the US
public fleet maintenance market of US$3.6 billion is expected to grow between
5 and 7 per cent. annually during the next three to five years.

RPTS businesses provide FirstGroup with a strong position in three key US
transportation markets with long-term commercial potential.

Commenting on the acquisition, Trevor Smallwood, Chairman of FirstGroup, said:

'We have been carefully looking to expand into the growing US markets for some
time. RPTS provides FirstGroup with an excellent platform in three expanding
public transportation markets and the opportunity for further growth as the
trend of outsourcing public sector transportation services in the US is
expected to continue. '

Commenting on the acquisition, John Dorr, CEO, RPTS, said:

'We are looking forward to joining FirstGroup and expanding our successful
businesses.  The American transport market will offer exciting opportunities
over the coming years.  We are very positive about our future as a core
division in a leading transport provider with ambitions to grow the business
internationally.'


Transaction Details

- The acquisition consideration will be financed partly through a 1 for 4
rights issue and partly through a new bank facility.

- The acquisition is conditional on, inter alia, approval of FirstGroup
shareholders. 

- A circular will be sent to shareholders in due course containing, inter
alia, an accountant's report on RPTS and notice of extraordinary general
meeting. The circular is expected to be posted to shareholders by mid
September 1999.

- The rights issue has been fully underwritten by Warburg Dillon Read who are
also joint brokers to the rights issue with Cazenove & Co.

- The proposed rights issue which is being made in the form of an issue of
convertible unsecured loan notes (the 'Stock Units') which are repayable with
interest in the event of the acquisition not being completed.

- Bank facilities arranged and underwritten by Warburg Dillon Read cover £850
million of bridging and term finance.

Further details of the rights issue and proposed acquisition are set out in
the draft Chairman's letter and the accompanying definitions contained in Part
II of this announcement.

An analyst's meeting will be held at the offices of Warburg Dillon Read, 100
Liverpool Street, London, EC2 at 9.30 am today.



Press Enquiries:

Trevor Smallwood       Executive Chairman,       0171 291 0505
                       FirstGroup

Moir Lockhead          Chief Executive,          0171 291 0510
                       FirstGroup

Mike Mitchell          Director of               0171 291 0504
                       Communications,           or
                       FirstGroup                0370 647353
              

Patrick Handley        Brunswick                 0171 404 5959

Alex Wilmot-Sitwell    Warburg Dillon Read       0171 567 8000
Mark Durr              Warburg Dillon Read       0171 567 8000
Jim Renwick            Warburg Dillon Read       0171 567 8000

John Paynter          Cazenove & Co              0171 588 2828
Malcolm Moir          Cazenove & Co              0171 588 2828


Part II

July 1999
To holders of FirstGroup Ordinary Shares and, for information only, to holders
of options under the FirstGroup Share Option Schemes and participants in the
FirstGroup Share Plan.

                    1 FOR 4 RIGHTS ISSUE TO RAISE
                     APPROXIMATELY £238 MILLION
      PROPOSED ACQUISITION OF RYDER PUBLIC TRANSPORTATION SERVICE, INC.

Introduction
------------
It was announced today that FirstGroup has proposed a 1 for 4 Rights Issue of
86,470,881 units of Convertible Unsecured Loan Stock in FirstGroup Acquisition
Limited to raise approximately £238 million.

It was also announced today that FirstGroup has entered into a conditional
agreement with Ryder System, Inc. to acquire the entire issued share capital
of Ryder for US$940  million payable in cash (equivalent to £602 million) (the
'Acquisition').

Ryder is a wholly-owned subsidiary of Ryder System, Inc., the US logistics and
transportation group. Ryder is one of the major operators in three US markets,
being the student transportation market, the public transit management market
and the public fleet maintenance market. The aggregate value of these markets
is estimated by the Directors to be US$25 billion.

The Acquisition consideration of US$940  million will be financed partly
through the entire net proceeds of the Rights Issue and partly through the New
Bank Facility. The Rights Issue has been fully underwritten by Warburg Dillon
Read, who are also joint brokers to the Rights Issue with Cazenove & Co.

In view of Ryder's size relative to FirstGroup, the Acquisition is
conditional, inter alia, upon the approval of the Shareholders which will be
sought at the Extraordinary General Meeting of the Company. A circular will be
sent to Shareholders in due course containing, inter alia, an accountants'
report on Ryder and notice of the Extraordinary General Meeting. The Directors
expect that the circular will be sent to Shareholders by the end of August,
1999.

The proposed Rights Issue is being made in the form of an issue of convertible
unsecured loan stock which is repayable with interest in the event of the
Acquisition not being completed.

The purpose of this document is to set out the reasons for the Rights Issue in
the context of the Acquisition.

Information on Ryder
--------------------

Ryder has three principal operations:

Ryder Student Transportation Services, Inc. ('RSTS')
RSTS is the second largest private school bus operator by revenue in the US. 
Revenues of US$325.4 million (£208 million) for 1998 have been warranted by
Ryder Systems, Inc. to FirstGroup under the Acquisition Agreement. RSTS
operates a fleet of more than 10,200 school buses which carry more than
650,000 students daily in 477 school systems of 25 states in the US. The RSTS
business was started in 1985 through the acquisition by Ryder System, Inc. of
Rustman Bus Company in St. Louis in 1985 with 902 buses.  Subsequently, the
business expanded through the acquisition of several smaller US transportation
companies.  RSTS was incorporated as a separate company in 1987.

Ryder/ATE, Inc. ('ATE')
ATE is the second largest participant by revenue in the US public transit
contracting market.  Revenues of US$197.2 million (£126 million) for 1998 have
been warranted by Ryder System, Inc. to FirstGroup under the Acquisition
Agreement. In 1984, ATE began transit contracting and, since it was acquired
by Ryder in 1986 and the Directors believe that it has grown the transit
contracting activities to represent more than 90% of its revenue. ATE helps
customers manage their own transit systems, analyse operations, maintain
vehicles and organise transportation services for disabled passengers. It can
also provide fully or partially contracted out operational services. It serves
transit authorities, departments of transportation, federal agencies, and
municipal planning organisations and the Directors estimate that it provides
services to more than 74 customers in 30 states in the US, managing on-site 36
municipal transit systems and operating 38 transit and para-transit systems.

ATE's fleet maintenance unit, Ryder/MLS ('MLS')
The Directors believe that MLS is the largest private supplier of fleet
maintenance services for public fleets and for utility companies in the US and
Puerto Rico.  Revenues for 1998 of US$142.1 million (£91.0 million), including
intersegment eliminations of US$82.9 million (£53.1 million) for 1998 have
been warranted by Ryder System, Inc. to FirstGroup under the Acquisition
Agreement. MLS was founded in 1978 as Managed Logistics System, Inc. to serve
US local governments in their fleet maintenance needs. Ryder System, Inc.
acquired the company in 1987. MLS provides a range of fleet maintenance to the
public fleet market business. The services provided by MLS to 75 governmental
entities and private companies in the US cover a spectrum of functions,
ranging from maintenance programmes and fleet inventory management to employee
hiring and training and budgeting and accounting functions. MLS manages and
maintains over 30,000 pieces of equipment for public transit agencies, cities,
counties, colleges and utilities.

Financial information on Ryder
------------------------------

The following information is an extract from the unaudited financial
information on Ryder set out in the appendix to Part V. This information is
warranted by Ryder to FirstGroup under the Acquisition Agreement. Shareholders
are advised to read the whole of this document and should not just rely on the
summarised information below.


                                      Years ended December 
                                              31,
                                               -----
                                       1998       1997
                                       (US$ thousands)
------
Revenue             
RSTS                                325,367       285,308
ATE                                 197,238       184,980
MLS                                 142,056       128,495
Intersegment eliminations          (82,913)       (73,026)
                                       ----       -----
Total revenue                       581,748       525,757
                                   =========       =========
Earnings before income taxes
RSTS                                  42,775       36,840
ATE                                    9,725       10,264
MLS                                   19,393       20,877
Intersegment eliminations           (19,254)      (17,126)
                                       -----       -----
Total from reportable segments       52,639       50,855

Year 2000 expense                      (755)         (2)
                                        ------      ----
Total earnings before income taxes*   51,884       50,853
                                   =========       =========

*       After interest of US$10,532 thousand (1997: US$9,159 thousand)
As at 31 December, 1998, Ryder had net assets of US$293.0 million.

Background to and reasons for the Acquisition
---------------------------------------------

FirstGroup's strategy is to become one of the world's leading transport
providers. Having consolidated its position as the UK's largest bus operator,
and with its rail and airport operations showing strong progress, FirstGroup
views selective expansion in overseas markets as a vital means to increase
value for its shareholders. In September 1998 the Group began its first
overseas operation to run bus services through its New World First Bus joint
venture participation in Hong Kong. On 5 July 1999 the Group announced that it
had conditionally agreed to acquire Bruce Transportation Group, Inc ('Bruce'),
a leading school bus operator in the New England region of the United States,
for a cash sum of up to US$12.8 million. The Directors believe that this
represents an important strategic step for the Group into the United States
school bus market. The Group has long seen public and student transport in the
United States as an important potential growth market and the Directors
believe that continuing cost pressures in the United States public sector will
result in further outsourcing of transportation and fleet maintenance and
management by United States governmental organisations. The acquisition of
Ryder represents a further step for the Group in these markets. The Directors
believe that Ryder's experience in this area will provide a strong base for
further potential expansion and additional opportunities in North America
continue to be actively pursued.

The Directors believe that the outsourcing of local, state and federal
government services in the US has been growing rapidly over the past two
decades. This has been driven by funding reductions and a growing demand for
new services.  Ryder is well placed to take advantage of outsourcing in three
principal areas in the US, namely the student transportation market, the
public transit contracting and managing market and the public fleet
maintenance market.

US student transportation market
--------------------------------

Approximately 450,000 school buses transport over 23 million students daily in
the United States1. The North American school bus market is worth some US$13.5
billion2. With only 30 per cent. of the market privatised, the opportunities
are clear for growth2. Private school bus operators are small and highly
fragmented. The Directors estimate there are some 5,000 private school bus
operators in the US, of which only 10 have fleets of more than 900 buses.

RSTS, with over 10,200 school buses, is the second largest private school bus
operator by revenue in the United States. It has historically won renewals of
approximately 95 per cent. of contracts. As consolidation is expected to
continue in this market segment the Directors expect to increase RSTS's share
of the student transportation market.

US public transit contracting and managing market
-------------------------------------------------

The Directors believe that the transit contracting and managing market in the
United States is worth US$7.5 billion and they expect it to grow between four
and five per cent. annually, reaching nearly US$8.5 billion within the next
three years. The Directors currently estimate private firms have penetrated
approximately 20 per cent. of the market. Their penetration is expected to
increase as private firms continue to demonstrate that they can produce
significant cost savings as compared to in-house public sector operations.

ATE is the second largest participant by revenue in the public transit
contracting and managing market. The Directors estimate that ATE has
approximately 15 per cent. share of the market served by private firms. The
Directors believe that ATE has historically won renewals of approximately 90
per cent. of contracts. The Directors believe that ATE is well positioned to
take advantage of anticipated market growth given its outstanding reputation
for providing quality services, the depth of its experienced management and
operations staff, and the fact that many of ATE's employees transfer from the
company into high-level decision making roles in the public sector.

US public fleet maintenance market
----------------------------------

The Directors believe that the US public fleet maintenance market of US$3.6
billion is expected to grow between 5 and 7 per cent. annually during the next
three to five years. In addition, the Directors believe that the percentage of
the market which is outsourced to private operators is currently growing at
between 15 and 18 per cent. annually.

The Directors believe that MLS is the largest operator in the public sector
fleet maintenance market by revenue in the US and Puerto Rico. The Directors
estimate that MLS provides services to approximately one third of the cities
and counties in the United States and Puerto Rico that outsource their fleet
maintenance services and it has historically won renewals of approximately 95
per cent. of contracts.
 
Benefits of the Acquisition
---------------------------

The Acquisition represents a unique opportunity to build on the strength of
the recent successes of the Group and will benefit the Group by:
-       enabling entry to markets with excellent growth prospects and further
penetration potential;
-       establishing a solid platform for further growth in North America;
-       providing a proven base of operational and marketing skills;
-       offering exposure to new opportunities in the public sector fleet
maintenance business; and
-       broadening the spread of the Group's earnings on an international
basis.

Management
----------

Ryder has a capable and diverse management team. John Dorr, the President,
started the company in 1986 as a business development initiative within Ryder
System, Inc.

John Dorr has led the expansion of Ryder through several acquisitions of
smaller transportation companies, and the integration of the three stand-alone
businesses into Ryder in 1993.

The two primary operations of Ryder are led by two senior vice presidents.
John Elliott, Senior Vice President of Ryder has over 25 years of experience
in student transportation. Elliott joined Ryder in 1986 through the
acquisition of the company in which he was president. Richard Clair, Senior
Vice President of ATE/MLS has over twenty years of various types of public
transit experience.

Karl Brenkert III, Chief Financial Officer, is responsible for finance and
accounting within Richard. He joined the division in 1987.

Following the Acquisition, John Dorr will become Chief Executive Officer of
FirstGroup's new US operating Division. Ryder's Executive Management Board
will also include John Elliott, Richard Clair, Karl Brenkert III, Moir
Lockhead and Tony Osbaldiston. It is intended to strengthen Ryder's management
team in the financial and operational areas with support from FirstGroup's UK
management team.

Financial effects of the Acquisition
------------------------------------

The Directors believe that the Acquisition will have an immediate beneficial
impact on earnings per FirstGroup Ordinary Share (before amortisation of
goodwill) following completion of the Acquisition, and will create real and
increasing value for FirstGroup Shareholders. This statement should not be
interpreted to mean that earnings per FirstGroup Ordinary Share will
necessarily be greater than those for the relevant preceding financial period.

Current trading
---------------

FirstGroup
----------

On Thursday 15 July the Company announced at the Annual General Meeting that
for the first three months of this financial year Group trading was ahead of
the Directors' expectations.

Overall trading this financial year has been good and the Directors look
forward to the rest of the financial year with confidence.

Ryder
-----

Ryder's revenue has increased in the first five months of 1999 compared with
the corresponding period in 1998.  The revenue growth resulted from new
student transportation and transit management business, as well as several
acquisitions completed in student transportation in 1998.  In the first give
months margins were adversely affected by bad weather and higher driver
compensation costs.  Increases in customer charges during the second half of
1999 are expected to favourably impact results for the second half of 1999.

Financing the Acquisition
-------------------------

The Acquisition will be financed partly through the Rights Issue and partly
through the New Bank Facility.

The consideration which exceeds the written down tax value of Ryder's assets
is tax deductible on a straight line basis over 15 years.

The Acquisition and its financing will substantially enlarge the Company's
financing requirements and cash flows. Accordingly, to permit this and further
expansion, the Company intends to propose an ordinary resolution at the EGM to
increase the borrowing limit under the Company's Articles of Association.

Your attention is drawn to the summary of the New Bank Facility set out in
Part V of this document.

Principal terms of the Rights Issue
-----------------------------------

The Directors propose to raise approximately £238 million, before expenses, by
way of a rights issue of Stock Units in FirstGroup's subsidiary, FirstGroup
Acquisition, to Qualifying Shareholders.
Upon the Acquisition being completed in accordance with the terms of the
Acquisition Agreement, each Stock Unit will mandatorily be converted into one
new FirstGroup Acquisition Preference Share. Subject to conversion of the
Stock Units occurring, FirstGroup offers to acquire all the FirstGroup
Acquisition Preference Shares arising on conversion on the basis of one new
FirstGroup Ordinary Share for each FirstGroup Acquisition Preference Share.
Under the terms of the Deed Poll, the Offer will mandatorily be deemed to have
been accepted by Stockholders on conversion of the Stock Units. On completion
of the Offer, 86,470,881 new FirstGroup Ordinary Shares will be allotted and
issued. Each Stock Unit therefore effectively translates into one new
FirstGroup Ordinary Share.
Pursuant to the Rights Issue, Qualifying Shareholders will be offered Stock
Units at a price of 275p per unit on the following basis:

1 Stock Unit for every 4 existing FirstGroup Ordinary Shares

and so in proportion for any other number of FirstGroup Ordinary Shares held
at the close of business on Friday 16 July 1999, the Record Date. Fractions of
Stock Units will not be allotted to shareholders but will be aggregated and
sold in the market for the benefit of FirstGroup.

The Rights Issue is conditional upon, inter alia, the Underwriting Agreement
having become unconditional and upon the Stock Units being admitted to the
Official List.

Listing of the Stock Units is expected to become effective and dealings in
them to commence, nil paid, on Friday 23  July 1999. Dealings in the new
FirstGroup Ordinary Shares to be issued on completion of the Offer are
expected to commence during September 1999.

The latest time for acceptance and payment in full in respect of the Rights
Issue is 3.00 p.m. on Thursday 12  August or such later date as Warburg Dillon
Read and FirstGroup may agree.

Conversion of the Stock Units into FirstGroup Acquisition Preference Shares
and full acceptance of the Offer would result in the issue of 86,470,881 new
FirstGroup Ordinary Shares (representing approximately 20 per cent. of the
issued ordinary share capital of FirstGroup, as enlarged by the Offer). The
new FirstGroup Ordinary Shares will be issued credited as fully paid and will
rank pari passu in all respects with the existing issued FirstGroup Ordinary
Shares, except for the final dividend to be paid on 27  August 1999 in respect
of the financial year ended 31 March 1999.

To enable funds advanced by FirstGroup shareholders to be repaid if the
Acquisition is not completed, those shareholders taking up their rights
pursuant to the Rights Issue will be entitled to units of mandatorily
convertible unsecured loan stock in FirstGroup Acquisition, a wholly-owned
Cayman Islands incorporated subsidiary of FirstGroup ('Stock Units'). The
Stock Units are constituted by the Deed Poll. The Stock Units will be repaid
on 31  December 1999, if they have not been converted or repaid before that
date. It is the intention of FirstGroup and FirstGroup Acquisition that the
Stock Units should be repaid prior to that date if any fact or circumstance
exists which means that the conditions of the Acquisition Agreement will not
be satisfied. Interest at the rate of 4.5 per cent. per annum will be paid on
repayment of the Stock Units in circumstances where the Stock Units are not
converted in accordance with the terms of the Deed Poll. No interest will be
payable on the Stock Units if they are converted in accordance with the terms
of the Deed Poll. Under the terms of the Deed Poll, FirstGroup has guaranteed
all obligations of FirstGroup Acquisition in respect of the Stock Units.

The Company may, at its discretion, modify the terms of the Acquisition and,
if this results in a reduction in the consideration payable, it may instead of
conversion, repay a proportion of the Stock Units. In these circumstances,
interest will be paid on repayment at the rate of 4.5 per cent. per annum.

Further information on the Rights Issue, the Stock Units and the Offer is
contained in Part II of this document.

The Rights Issue has been fully underwritten by Warburg Dillon Read who are
also joint brokers to the Rights Issue with Cazenove & Co.. Further terms of
the Rights Issue, including the procedure for acceptance and payment are set
out in Part II of this document.

Under the terms of the Underwriting Agreement, further details of which are
set out in section B of Part V, there are certain rights to terminate the
Underwriting Agreement prior to admission of the Stock Units to the Official
List becoming effective. If these rights are exercised, or any of the other
conditions to the Underwriting Agreement are not satisfied, the Rights Issue
will not proceed.

The existing FirstGroup Ordinary Shares are eligible for settlement in CREST.
If the Stock Units are converted and exchanged, the new FirstGroup Ordinary
Shares arising will be issued in certificated form and represented by
definitive share certificates which are expected to be despatched by October
1999. Pending despatch of the certificates for the new FirstGroup Ordinary
Shares, transfers will be certified against the register of FirstGroup
Shareholders. Those Qualifying Shareholders who hold shares at the Record Date
both in certificated form and also in uncertificated form will be sent a
Provisional Allotment Letter in respect of each holding. Shareholders who wish
to hold new Ordinary Shares in uncertificated form will need to apply for
their new Ordinary Shares to be converted into uncertificated form in
accordance with CREST procedures.

Participants in the FirstGroup Share Schemes
--------------------------------------------

The attention of participants under the FirstGroup Share Schemes is drawn to
the information which appears in paragraph 6 of Section A of Part II of this
document.

Overseas shareholders
---------------------

The attention of shareholders who have registered addresses outside the United
Kingdom, or who are citizens or residents of countries other than the United
Kingdom, is drawn to the information which appears in the paragraph entitled
'Overseas shareholders' in Part II of this document.

Action to be taken
------------------

Provisional Allotment Letters setting out the entitlements of Qualifying
Shareholders to Stock Units and containing instructions on how Qualifying
Shareholders may take up their entitlements under the Rights Issue are
enclosed with this document.

To take up their entitlements to Stock Units in whole or in part, Qualifying
Shareholders must lodge their Provisional Allotment Letters in accordance with
the instructions on them, together with a remittance for the full amount
payable by post or by hand to Lloyds TSB Registrars, Antholin House, 71 Queen
Street, London EC4N 1SL by 3.00 p.m. on Thursday 12  August 1999.

Further details concerning the Rights Issue (including the conditions of the
Rights Issue, payment of the subscription price for the Stock Units and
acceptance procedures, the procedures to be followed in respect of Stock Units
which are not taken up and the restrictions applying to overseas shareholders)
are set out in Part II of this document. Details of the terms of the Stock
Units and the Offer are also set out in Part II of this document.

Taxation
--------

Information concerning United Kingdom taxation with regard to the Rights Issue
is set out in Section D of Part II of this document. If in doubt as to your
tax position or as to what action to take in relation to the Rights Issue, you
are recommended to consult your own professional adviser.

Extraordinary General Meeting
-----------------------------

It is the intention that by mid September 1999 a circular will be sent to
Shareholders containing notice of the Extraordinary General Meeting. At the
Extraordinary General Meeting an ordinary resolution will be proposed inter
alia, to, approve the Acquisition, to increase the authorised share capital of
the Company, to authorise the Directors to allot shares pursuant to Section 80
of the Act and, as the current borrowing limits of the Company are
insufficient to enable the Company to make the Acquisition, to increase the
borrowing limits, under the Company's Articles of Association.

Further information
-------------------

Your attention is drawn to the further information set out in Parts II to VI.

The Directors, who have been advised by Warburg Dillon Read, consider the
Rights Issue and the Acquisition to be in the best interests of FirstGroup and
its shareholders as a whole. In providing advice to the Directors, Warburg
Dillon Read has placed reliance on the Directors' commercial assessments.




Warburg Dillon Read, which is regulated by the Securities and Futures
Authority, is acting for FirstGroup and FirstGroup Acquisition Limited and no
one else in relation to the Acquisition and the Rights Issue and will not be
responsible to any other person for providing the protections afforded to
customers of Warburg Dillon Read, or for providing advice in connection with
the Acquisition and the Rights Issue.

Neither this document nor any Provisional Allotment Letter may be treated as
an invitation to subscribe or purchase or an offer to sell Stock Units or new
FirstGroup Ordinary Shares to any person in the United States, Canada or
Australia where any such invitation to subscribe or purchase or any offer to
sell would be prohibited by or inconsistent with the securities laws of such
jurisdiction. This document may not be treated as an invitation to subscribe
or purchase or an offer to sell Provisional Allotment Letters, Stock Units or
FirstGroup Ordinary Shares to any shareholder with a registered address in the
United States, Canada or Australia. 

 Definitions
-----------

'Acquisition'       the proposed acquisition by FirstGroup for Ryder pursuant
to the Acquisition Agreement

'Acquisition Agreement'       the agreement dated 21 July 1999 between
FirstGroup and Ryder System, Inc. summarised in section A of Part V

'Act'       the Companies Act 1985, as amended

'Companies Law'       the Companies Law (1998 Revision) of the Cayman Islands

'CREST'       the relevant system, as defined in the CREST Regulations (in
respect of which CRESTCo. Limited is operator as defined in the CREST
Regulations)

'Deed Poll'       the deed poll constituting the Stock Units, the terms of
which are summarised in Part II of this document, to be executed by FirstGroup
and FirstGroup Acquisition

'Directors' or 'Board'       the directors of FirstGroup, whose names appear
on page 5 of this document

'Effective Date'       the date on which the Acquisition is completed in
accordance with the Acquisition Agreement, the Stock Unites are to be
converted into FirstGroup Acquisition Preference Shares, as described in
paragraph 2 of section B of Part II of this document and the Offer is to be
completed

'Enlarged Group'       the Group as enlarged by the Acquisition

'Extraordinary General        the extraordinary general meeting 
 Meeting' or 'EGM'       of the company to be convened for the purposes of,
inter alia, seeking Shareholder approval of the Acquisition, notice of which
will be set out at the end of the Shareholders' Circular

'FirstGroup Acquisition'       FirstGroup Acquisition Limited, a wholly-owned
subsidiary of FirstGroup incorporated in the Cayman Islands, which is issuing
the Stock Units pursuant to the Rights Issue 

'FirstGroup Acquisition        preference shares of 5p each in the 
 Preference Shares'       capital of Frank Shares Acquisition mandatorily
exchangeable for new FirstGroup Ordinary Shares

'FirstGroup' or        FirstGroup plc
 the 'Company'

'FirstGroup's financial        means Warburg Dillon Read or any 
 adviser'       appointed replacement

'FirstGroup Employee        the FirstGroup plc Employee Share 
 Share Ownership Plans'       Ownership Plan, the Mainline Employees'
Shareholding Scheme, the Southampton CityBus Profit Sharing Scheme and the
CentreWest Profit Sharing Scheme

'FirstGroup' or 'Group'       FirstGroup and its subsidiaries

'FirstGroup Ordinary          ordinary shares of 5p each in the 
 Shares'                      capital of the Company

'FirstGroup Share Option        The FirstGroup plc Save as You 
 Schemes'                  Earn Option Scheme, the GRT Bus Group plc Executive
                             Share Option Scheme and the Badgerline Group plc
                              Executive Share Option Scheme

'FirstGroup Share Schemes'       the FirstGroup Share Option Schemes, the
                              FirstGroup Employee Share Ownership Plans and the
                              FirstGroup Performance Share Plan

'Issue Price'       275p per Stock Unit

'London Stock Exchange'       London Stock Exchange Limited

'New Bank Facility'       the £690 million and US$250 million loan facility
                          made available to the company, inter alia, for the
                          purpose of the Acquisition

'New FirstGroup Ordinary        the new FirstGroup Ordinary Shares 
 Shares'                        to be issued, credited as fully paid, in
                               connection with the Offer in exchange for
                              FirstGroup Acquisition Preference Shares

'Nominee'       a nominee selected by the Company for the purpose of the
                    conversion described in paragraph 2 of section B of Part III

'Offer'       the Offer by FirstGroup for the FirstGroup Acquisition
              Preference Shares, contained in Part II of this document, to
              be completed on conversion of the Stock Units and satisfied by the
              issue of New Ordinary Shares

'Official List'       the Official List of the London Stock Exchange

'Provisional Allotment        the form of provisional allotment 
 Letter'                   letter to be sent to Qualifying Shareholders pursuant
                         to the Rights Issue

'Qualifying Shareholders'       holders of FirstGroup Ordinary Shares whose
                              names are on the register of members of the
                              Company on the Record Date

'Record Date'       the close of business on 16 July 1999

'Rights Issue'       the offer by way of rights of Stock Units to Qualifying
                    Shareholders, as described in Pat II of this document

'Ryder'       Ryder Public Transportation Services, Inc.

'Ryder Group'       Ryder and it subsidiaries

'SEC'       the United States Securities and Exchange Commission

'Securities Act'       the United States Securities Act of 1933, as amended

'Shareholders'       holders of FirstGroup Ordinary Shares

'Shareholders Circular'       the circular constituting a Class 1 circular to
                              be sent to FirstGroup Shareholders in due course
                              seeking approval of the Acquisition and containing
                              an accountants' report on the financial
                              information relating to Ryder

'Stockholders'       persons registered or entitled to be registered as the
                    holders of Stock Units

'Stock Units'       the units of convertible unsecured loan stock of 5p each
                    in FirstGroup Acquisition to be issued pursuant
                    to the Rights Issue and mandatorily convertible into
                    FirstGroup acquisition Preference Shares, the terms of which
                    stock units are summarised in Part II of this document

'Underwriting Agreement'       the agreement between FirstGroup, FirstGroup
                              Acquisition and Warburg Dillon Read dated 21 July
                              1999, details of which are set out in section B of
                              Part V of this document

'United Kingdom' or 'UK'       United Kingdom of Great Britain and Northern
                              Ireland

'United States' or 'US'       the United States of America

'US$' or '$'        the lawful currency of the United States from time to time

'Warburg Dillon Read'       Warburg Dillon Read, a division of UBS AG

For the purposes of translation, a rate of US$ 1.561 to £1 has been used.