FirstGroup to offload US arm amid activist pressure
Transport giant FirstGroup is seeking to sell off its Greyhound buses arm in the US as it wrangles with one of its major shareholders.
The transport giant has put its US-based Greyhound coach network and UK arm First Buses up for sale amid annual losses of £97.9 million.
This comes despite losses going down by £327 million compared to the previous year.
The group also revealed that it is unlikely to make profit on its South Western train franchise with its value written down by £100 million.
Now, 9.8 per cent stakeholders Coast Capital Management, an activist investor, seek to overhaul the group’s board and sell off its UK railway arm.
It is understood that Coast are disgruntled over current returns to shareholders in the business.
Matthew Gregory, chief-executive of FirstGroup, labelled Coast’s plans “incoherent”, while Coast partner James Rasteh conceded that the investor was “in no position” to assume control of the group.
FirstGroup shares were up by 12 per cent in Thursday morning trading after Greyhound was put on the market.
The group currently operates around a fifth of all local UK bus services outside the capital, with its First Rail arm responsible for the Great Western Railway and TransPennine Express franchises.
Gregory revealed that First Rail is under review pending future government strategy as the group ponders the balance of risk and reward.
The rail arm is responsible for accumulating £331 million over the last five years, but the group’s focus is now set to turn to the other side of the Atlantic despite the offload of Greyhound.
“The future emphasis of our business is going to be our Northern American contract business,” Gregory told the BBC.
“This is our First Student business – the yellow school bus service – and the First Transit private transportation operator. There are very limited hard synergies between our businesses, particularly between the UK and the US and we think now is the time.”
As for First Buses, Gregory believes the group has “improved the margins” sufficiently and that it was now an appropriate time “to look at separating it from the group”.