By Scott Wright
SCOTTISH transport giant FirstGroup has come under renewed pressure to exit its bus operations in
North America.
Activist investor Coast Capital, a long-term thorn in the side of the FirstGroup board, said it plans to seek a requisition for an emergency general meeting (EGM) in order to give shareholders the chance to vote in favour of de-merging First Student and First Transit across the Atlantic.
The new push comes after Aberdeen-based FirstGroup revealed in December that it would consider a “potential disposal” of First Student and First Transit, following the appointment of advisors to “formally explore all options in respect of our North American contract businesses”.
Coast, which holds more than 10 per cent of FirstGroup’s shares, effectively signalled that it had run out of patience with the business. It stated that investors had “heard nothing from the company or its board” since the strategic review was launched three months ago.”
The investor notes the share price of FirstGroup had declined by 20 per cent since that time, though the stock market has incurred huge losses in recent days because of sentiment sparked by the coronavirus crisis.
Shares in FirstGroup closed down 5.6%, or 5.7p, at 94.5p last night.
Coast said: “Unless the board announces a separation, Coast Capital intends to requisition an EGM in order to provide investors with the opportunity to vote on an immediate de-merger of the North American operations. Coast Capital believes that in the absence of a full divestment notably above book value, the company must pursue a listing of these businesses on a North American exchange and the LSE (London
Stock Exchange). This will allow UK investors to realise value from their investment in the company, and enable new North American investors, public or private, to buy into the North American operations. Furthermore, the management teams, employees, and clients of North American operations can only benefit from a reinvigorated investor base which will invest in and help grow the operations.”
First Student operates school buses, while First Transit provides contract bus and shuttle services to airports
and hospitals.
Responding to Coast’s latest intervention, FirstGroup told the stock market: “The board agrees that there is material value to be unlocked within the group and is intent on delivering this in the best interests of all shareholders. Our scheduled trading statement will be published on Wednesday, March 11, in which we will update the market on trading since our half-year results in November in addition to the progress of our strategic plans, including in relation to our North American contract businesses.”
The move by Coast is the latest salvo in its long-running campaign for change at FirstGroup. US-based Coast forced a general meeting of FirstGroup last June, when it failed in a bid to oust the bulk of the company’s board, amid claims the firm had under-performed. Shareholders voted then against resolutions to remove six of the then 11 board members, however chairman Wolfhart Hauser then resigned.
He was succeeded by ex-Arriva boss David Martin.
FirstGroup’s plans for the US came under the microscope in November, when Robert Tchenguiz claimed chief executive Matthew Gregory and
Mr Martin held differing views over strategy. Mr Tchenguiz favoured selling the US businesses. FirstGroup said was committed to the strategy unveiled by
Mr Gregory last May, when it said it would seek to sell Greyhound and explore separating First Bus in the UK.
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