FirstGroup rejects US hedge fund break-up proposal
FirstGroup says the plan was “not compelling” and contained “a number of structural flaws and inaccuracies”.
Wednesday 11 December 2013
FirstGroup has rejected pressure from a US investor to sell-off its North American bus business in a bid to boost shareholder value.
New York-based hedge fund Sandell Asset Management, which has a 3.1 per cent stake in FirstGroup, wrote to the transport group’s board calling for a spin-off and flotation of its US school and transit businesses, and the sale of Greyhound, its inter-city bus provider.
But FirstGroup said in a statement today that the plan was “not compelling” and contained “a number of structural flaws and inaccuracies”.
The news comes as FirstGroup’s rival Stagecoach reported a strong set of first half results and underlined the importance of North America to its business.
Stagecoach boss Martin Griffiths said: “I’m very positive on our US business. It’s the fastest growing part of the group.“
Revenue at the North American division jumped 17.2 per cent to $238.3m, thanks to a 22 per cent increase in Stagecoach’s Megabus business there.
Griffiths said: “We’re looking at further geographic expansion of Megabus routes and looking at some new products including Megabus gold and potentially thinking about sleeper buses in the longer term.”
Across the group Stagecoach saw profit reach £98.5 million, up from £96.8 million a year earlier. Revenue grew from £1.4bn to £1.47bn.
Profit from Stagecoach’s London bus business was £9.6m, up from £8.3m, but revenues were down.
Griffiths said he “fully expects” to hit full-year profit targets.
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