Aberdeen-based global bus and rail giant FirstGroup plc has come under new pressure from two of its shareholders to sell more of its US assets as part of a strategy which already includes the planned sale of its North American bus service Greyhound.
Coast Capital Management and Robert Tchenguiz have asked FirstGroup for more clarity on its plans.
FirstGroup is a major provider of rail and bus services in the UK and North America. With £7.1 billion in revenue and around 100,000 employees, it transported 2.2 billion passengers last year.
In North America, its First Student business is the largest provider of home-to-school student transportation with a fleet of 43,000 yellow school buses, and its First Transit is one of the largest providers of outsourced transit management and contracting services.
Coast Capital, FirstGroup’s second-biggest shareholder with a roughly 10% stake, has joined Tchenguiz in calling for it to sell US assets.
“A sale of the U.S. assets would not only release meaningful value for shareholders, but would also allow these businesses and their invaluable employees and managers to thrive under a well-capitalized owner,” said Coast Capital.
Tchenguiz, who claims a 4.7% economic interest in FirstGroup, said he would seek a shareholder meeting and urged the group’s new chairman to review the US operations.
FirstGroup said: “Based on the most recent regulatory disclosures made to the company Robert Tchenguiz has a direct shareholding of 0.02% of the issued share capital together with additional economic interests from a spread bet (the terms of which have not been disclosed).”
In a stock exchange statement, FirstGroup said: “FirstGroup plc notes the statement issued today by Robert Tchenguiz regarding the group’s half-yearly results announcement of 14 November 2019.
“The board has been clear, including in the recent half-yearly results announcement, that it is intent on realising value for all shareholders and is focused on actively managing the entire portfolio by all appropriate means.
“The board believes there is significant value to be unlocked across the group’s portfolio of leading public transportation businesses, and there are limited synergies between the divisions, particularly between the UK and North America.
“Realising greater value from the group is the clear priority and this is best achieved through a rationalisation of the current portfolio …
“We note Mr Tchenguiz’s comment concerning our North American assets and in particular the sale of a competitor.
“First Student and First Transit are valuable assets and well positioned in markets with profitable growth.
“The board has been consistent and clear that the objective is to realise value and therefore were a credible and deliverable offer to be received for these or any other business in the portfolio then, of course, the board would give that serious consideration.
“We also note the comment made by Mr Tchenguiz about an announcement in November 2018 regarding the pension deficit. This is an incorrect assertion and no such announcement was made.
“We also note the comment by Mr Tchenguiz regarding the potential to requisition a further General Meeting.
“Whilst this is the prerogative of shareholders, the board believes it would be in the best interests of all stakeholders for us to get on with the portfolio rationalisation and realise value for shareholders without further distraction or delay.”