Aberdeen-based global bus and rail giant FirstGroup plc has come under renewed attack from activist hedge fund Coast Capital which wants the group to demerge its North American businesses.
Coast Capital holds a 10% stake in FirstGroup.
The fund said it wants First Student and First Transit separated from the UK business.
Coast Capital argues both businesses are worth “notably” more than book value, and believes the North American unit would benefit from a New York or Toronto listing.
“A dual listing structure allows existing UK investors to retain shares of an LSE listed company, while also providing North American investors access to the largest pureplay North American student and transit operations …
“We believe there will be significant demand from US/Canadian investors for the shares of the leading provider of North American student transportation and transit operations — in light of the long term contracts (upwards of four years), high rates of contract renewals, and attractive margins and return on capital.”
The hedge fund added: “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.
“This will allow UK investors to realize value from their investment in the company, and enable new North American investors, public or private, to buy into the North American operations.”
FirstGroup replied in a stock exchange statement: “FirstGroup plc notes the announcement by Coast Capital.
“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 11 March, 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.”