Coast Capital renews attempt to force break-up of bus operator First Group
Coast Capital has renewed its attempts to engineer a break-up of transport operator First Group, saying it will try to force an emergency general meeting of shareholders unless the group announces a separation.
First Group has long been under pressure from several of its investors to separate the company’s North American operations into independent businesses, and announced a “strategic review” of these assets three months ago.
However, Coast said today that since then, “shareholders have heard nothing from the company or its board, and the share price has declined by 20 per cent”.
The activist investor, which has a 10 per cent stake in First Group, said in a filing that in the absence of a total divestment, the bus operator should list the businesses on both a North American bourse 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”, it added.
Coast said that the North American operations, First Student and First Transit, are worth “notably more” than their book value of 100p per share, estimating a price of 165p for each.
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Today First Group shares were trading a 94.90p, over five per cent down, as the firm suffered the same slump as the rest of the FTSE on coronavirus fears.
The bus and rail operator is in the process of selling its US coach service Greyhound, but said earlier this year it would make its two other American bus businesses a major focus.
Today is not the first time that prominent stakeholders have taken aim at the firm, with property magnate Robert Tchenguiz also demanding the spin-off of the businesses.
In November the British-Iranian Tchenguiz, who has stake worth nearly five per cent, told City PM that “the rationale of a vibrant US business which is being managed in Aberdeen, six time zones away, is not the most effective or efficient management strategy”.
First Group issued a statement in response, saying: “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 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.”