Student Transportation of Canada Announces Acquisition

Expansion to Southwestern Ontario Increases Canadian Dollar Cash Flow, Adds 200 Vehicles, Fuel and Currency Protection

TORONTO  (July 2, 2008) – Student Transportation of Canada (“STC”), an operating subsidiary of Student Transportation of America (“STA”) (TSX: STB), today announced that it has entered into an agreement to acquire Elgie Bus Lines Limited, a local school bus operator based in London, Ontario. Management expects the deal to be immediately accretive to shareholders of its common stock. The closing is contingent upon customer consent to the transaction which the parties expect shortly.

Elgie will add more than 200 vehicles and four locations to STC's Ontario operations, and C$8.2 million in annual revenue for the upcoming fiscal year.  The contract agreements with its school board customers provide for a revenue increase for the current year and a fuel cost mitigation provision. Recently, the Ontario Ministry of Education announced a grant to school boards for assistance with higher fuel costs incurred in the 2007-2008 school year.  

“This is another very good strategic acquisition for us in Ontario,” said Denis J. Gallagher, chairman and CEO of STC. “We continue to expand our footprint in the province as we open up a new service area in southwestern Ontario. The acquisition increases our Canadian dollar cash flow and further increases our natural currency hedge, which in addition to fuel mitigation, has been a strategic objective of ours. Almost all of the new business we’ve added this year in Canada and the U.S. includes fuel protection or 100 percent customer-paid fuel.

“The Elgie family has served the greater London area with outstanding service and dedication for over 55 years.  We are pleased to welcome Brad Elgie as he joins our management team and the entire team of drivers, mechanics and all other key staff members to our STC family of companies. We look forward to working with them and continuing the tradition of service excellence they have developed,” Gallagher said.

Once completed, Elgie will be the company’s eighth acquisition since its IPO, increasing its Canadian operations to more than 1,200 vehicles and nearly C$50 million in annualized revenue. The Company plans to utilize availability under its senior credit facility, recently created with the proceeds of the common share private placement offerings completed in April 2008, to fund the acquisition.

Alluence Capital Advisors Inc., based in Mississauga, Ontario, acted as financial advisors for the company.