Eurotunnel buys GBRf from FirstGroup

PARIS Tue Jun 1, 2010 8:10am BST

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PARIS (Reuters) - Channel Tunnel operator Eurotunnel (GETP.PA) is buying Britain's third-largest rail freight operator, GBRf, from UK transport company FirstGroup (FGP.L) for 26.3 million euros in cash, it said on Tuesday.

The acquisition will be combined with Eurotunnel's Europorte unit, which it bought from Veolia (VIE.PA) last year, Eurotunnel Chief Executive Jacques Gounon told Reuters in a phone interview.

"The size of the French and British freight markets together accounts for about 75 percent of that of the leader, Germany. This Franco-British axis has been insufficiently developed," Gounon said.

FirstGroup earlier confirmed it was selling its rail freight business to Europorte, for a total consideration of 31 million pounds ($45.24 million). Gounon said that the amount included pension liabilities.

FirstGroup said in a statement that proceeds of the disposal would be used to further reduce its net debt.

First GBRf, which specialises in hauling freight for customers such as French electricity giant EDF (EDF.PA), had annual sales of about 55 million pounds and a net profit of around 5 million pounds.

First GBRf competes with market leaders EWS, which belongs to German rail company Deutsche Bahn DBN.UL, and Freightliner Group Ltd.

Eurotunnel has a market share of about 3 percent of French rail freight, and this acquisition would give it about the same scale in the British market, Gounon said.

Shares in Eurotunnel were little changed on Monday, giving the company a market value of about 3 billion euros.

(Reporting by Michel Rose; Editing by James Regan and Sharon Lindores)

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