FirstGroup CEO quits amid NY hedge fund pressure

Aberdeen-based bus and rail giant FirstGroup plc said on Tuesday that CEO Matthew Gregory will step down at the company’s AGM on September 13, 2021.

The news of Gregory’s departure came a day after the firm’s biggest shareholder repeated its call for his resignation in the wake of a contentious asset sale.

FirstGroup’s biggest shareholder, New York-based hedge fund Coast Capital LLC, had called for Gregory’s departure following the £3.3 billion sale of the group’s North American businesses First Student and First Transit to Stockholm-based investment firm EQT Infrastructure.

Coast Capital owns roughly 15% in FirstGroup and had opposed the sale, arguing the price was too low.

Coast Capital had urged fellow shareholders “to vote against the proposed disposal of the company’s crown jewel assets, First Student and First Transit, unless the terms of the proposal are rapidly and substantively improved.”

However, on May 27, investors holding 61.3% of shares voted in favour of the deal — with 38.7% voting against.

Announcing the deal on April 23, FirstGroup said the transaction allowed it to make a £336 million contribution to its UK defined benefit pension schemes “and address other longstanding liabilities” including those relating to its Greyhound bus business, which is not included in the deal but remains up for sale.

Gregory told Reuters his resignation was not linked to Coast Capital’s demands.

“We’ve delivered this transaction … so I think it’s a new chapter in FirstGroup’s history, and I think its the right time for me to move on,” he said.

Coast Capital founding partner James Rasteh said: “We welcome his long overdue resignation and look forward to many other necessary changes.”

FirstGroup chairman David Martin — who was nominated to the company’s board by Coast in 2019 — will become interim executive chairman at the conclusion of the AGM until a permanent chief executive is appointed.

Gregory added: “Having delivered the substantial portfolio rationalisation strategy and with FirstGroup now positioned to emerge from the pandemic as a resilient and robust business, I have decided the time is right for me to move on to new opportunities.

“In this landmark year the group has more than risen to its challenges.

“We have delivered on our strategic objectives, protected our financial stability, and supported our communities with essential services while helping to shape the future of public transport in the UK.

“It has been my honour and a privilege to lead this great business and its many thousands of employees who are dedicated to serving their customers every day.”

Martin said: “Matthew has made a significant contribution to FirstGroup since joining in 2015, initially as CFO and then stepping forward to take up the post of chief executive in 2018.

“During that time, he has been instrumental in delivering the board’s strategy to rationalise our portfolio of businesses, culminating in the transformational sale of First Student and First Transit.

“Matthew was also responsible for delivering margin improvements particularly in First Student and First Bus, as well as First Rail’s successful Avanti West Coast bid, which restored FirstGroup to its leading position in UK passenger rail.

“Under his leadership the group adeptly responded to the unprecedented challenges created by the coronavirus pandemic.

“He leaves FirstGroup a more focused, resilient and flexible organisation, well positioned to benefit from the many opportunities ahead.

“On behalf of the board I would like to thank Matthew for all that he has achieved and wish him every success for the future.”

FirstGroup also announced results for the year to March 27, 2021, showing pretax profit was £115.8 million compared a pretax loss of £299.6 million a year ago.

Adjusted pretax profit was £39.4 million, down from £109.9 million.

FirstGroup posted revenue of £6.84 billion, down 11.7%.

Peel Hunt analyst Alexander Paterson said the results beat his expectations and were driven by outperformance at Greyhound, where losses have narrowed.

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.