Firstgroup brings in advisers to mull options for US arm
● ‘Strategic’ update comes four months after appointment of new chairman
Firstgroup, the Aberdeenheadquartered transport giant, has hired advisers to formally look into selling off its US assets amid shareholder pressure for a break-up of the business.
The bus and rail operator has faced calls to overhaul the entire boardroom and also to provide more clarity on its strategy.
Previously, it has spoken highly of its US business, which includes First Student and First Transit, as “valuable assets and well positioned in markets with profitable growth”, although it said it would give any offers or approaches “serious consideration”.
Bosses also said previously that they would consider separating out the huge First Bus business in the UK, alongside existing plans to offload the Greyhound coach operation.
Now, in a strategic update to the stock market, Firstgroup revealed that it had appointed advisers to “formally explore all options in respect of our North American contract businesses, First Student and First Transit, including a potential disposal”.
The group, which recently took over the West Coast Main Line rail franchise in partnership with Italian firm Trenitalia, told investors: “At our recent half-year results the group updated on progress including the strengthening of its rail business with the addition of West Coast Partnership, progressing the sale of Greyhound and the development of a framework for the First Bus pension scheme.
“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.”
It added: “In the meantime, we continue to focus on the individual plans for each of our businesses, ensuring that customer commitments, investments,aswellasgrowth and margin improvement plans are delivered.”
Chief executive Matthew Gregory 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.”
The latest change in strategy comes four months after new chairman David Martin joined the business. He was identified by activist investor Coast Capital as a potential new board member, when it was attempting an overhaul of the board earlier this year.
Last month, First posted a £187.1 million statutory pretax loss for the six months to 30 September, from a deficit of £4.6m a year earlier. On the firm’s preferred underlying basis, which excludes one-off costs, it made a pre-tax profit of £28.7m, down from £42m.