FirstGroup has announced another bus disposal to Stagecoach as it continues to reposition its UK bus division.

FirstGroup, which last week warned it would freeze its interim dividend and review the final payout due to the upheaval in the rail franchise market, is selling its Birkenhead and Chester bus operations to Stagecoach for £4.5 million.

Three depots along with 110 vehicles and 290 employees will transfer to the Perth-based group.

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A fortnight ago, FirstGroup announced the sale of its operations in Wigan to Stagecoach for £12m. That prompted questions from some analysts over First's avowed strategy of selling off underperforming businesses in its UK bus division, where it has promised to raise £100m from sales in the current financial year to April 2013.

Stagecoach revealed the Wigan business had revenues of £13.2m and an operating profit of £1.5m, a margin in line with FirstGroup's UK bus average. FirstGroup, however, said it was letting go of "geographic orphans" and was on track in its disposal plans.

Yesterday, Stagecoach said the Birkenhead and Chester operations had revenues of £11.9m and an operating profit of £600,000, a margin well below the average.

Les Warneford, managing director of Stagecoach UK Bus, said: "We believe there is significant scope to develop these businesses and improve their financial performance by investing in the quality of the bus fleet."

Stagecoach already has 300 buses and 900 staff in Merseyside and South Lancashire.

Giles Fearnley, First's managing director, UK Bus, said the businesses had lower than average margins. "They fit better with Stagecoach's existing portfolio in the area and also allow us to realise efficiencies in support costs," he said. "The sale of these operations marks further progress in disposing of selected assets and businesses."