First Group shareholder claims victory as firm weighs sale of US arm
A major First Group shareholder has welcomed the firm’s decision to consider a sale of its US businesses.
The transport giant today said it has appointed advisers to review its US school bus and public transit arms, adding that it will “explore all options” a month after a sinking share price pushed two big investors to urge it to dump its North American assets.
Read more: ‘Unforgivable’: Property tycoon blasts First Group over US assets
“Today is a victory for the shareholders, because at least they get transparency into what the company’s intentions are,” said one of those shareholders, Robert Tchenguiz, whose economic interest in the firm is 4.7 per cent.
He added that he hoped divesting from the US would boost First Group’s market cap to the extent that shareholders could realise the value of their investments. “The shares should reflect the true value of the breakup right now,” he said.
First Group’s share price climbed 4.2 per cent to 123.4p on the London Stock Exchange after the announcement.
Tchenguiz, a colourful British-Iranian property magnate who shares a £20m Kensington mansion with his 27-year-old Polish girlfriend, his ex-wife and two children, had previously criticised FirstGroup’s presence in North American as “not the most effective or efficient management strategy”.
First Group has come under increasing pressure from Tchenguiz and other investors including Coast Capital Management to sell off its US divisions, First Student and First Transit.
While the firm put up its low-margin intercity US bus service earlier this year, the company insisted as recently as May that its future core market would be the US, “centred on First Student and First Transit”.
When City PM asked whether today’s decision came in response to pressure from investors, First Group said: “We maintain a regular dialogue with shareholders and of course we welcome their views.”
Tchenguiz said: “I’ll leave that for you to decide.”
Read More: Virgin Trains manager jumps ship to First Group
“Today’s announcement to formally explore all options to maximise value from our North American businesses reflects the resolute focus of the entire board on realising value for all shareholders,” chief executive Matthew Gregory said.
The two divisions were responsible for more than 1bn US journeys and over half of the company’s profits in 2019.
Image credit: Getty