16th Dec 2019 08:26
(Alliance News) - FirstGroup PLC on Monday said it has been conducting a strategic review of its North American businesses First Student and First Transit and will "formally explore all options" including a potential sale.
The Aberdeen, Scotland-based public transport operator also said that it is separately undertaking an improvement programme to address the cost base of UK operation First Bus.
FirstGroup shares were up 0.5% at 119.00 pence each in London on Monday morning.
"We are actively addressing the cost base of First Bus through a comprehensive efficiency programme, the results of which will be substantially more evident in the second half of the year and beyond. Therefore, the board determined that greater value will be achieved by delivering this margin enhancement prior to any launch of a formal sale process," the company said in a statement.
Matthew Gregory, FirstGroup chief executive said: "We have taken a number of important steps that will enable a rationalisation of the group's portfolio. 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."
In the six months to September 30, First Student generated revenue of GBP851.6 million, up from GBP775.2 million a year ago. First Transit revenue increased to GBP588.7 million in the period from GBP519.6 million.
First Bus recorded revenue of GBP424.5 million, down from GBP433.9 million a year before.
Back in November, 10% shareholder Coast Capital Management LP demanded FirstGroup commit to a strategic review of its US businesses.
The activist investor said at the time: "Coast Capital agrees that there are no synergies between the UK and US assets of FirstGroup, and that a sale of the US assets would not only release meaningful value for shareholders, but would also allow these businesses and their invaluable employees and managers to thrive under a well-capitalized owner which would focus on technological developments, growth of operations, and employee participation in the divisions' success."
The train and bus operator's largest individual shareholder, Robert Tchenguiz, separately in November blasted the company's management and asked the company to publicly reveal its strategic plan announced in May. Tchenguiz holds a 4.7% stake in FirstGroup.
By Tapan Panchal; [email protected]
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