FirstGroup (FGP) has had a busy year. It got away a massive rights issue, has sold unwanted bus routes and underlying profit is rising again. But one of the bus and train operator's biggest shareholders is unimpressed and wants First to sell its US operations to further cut debt.
Hedge fund Sandell Asset Management, which owns a 3.1 per cent stake in First, reckons spinning off the American transit and school bus businesses, and selling the iconic Greyhound coaches operation would increase shareholder value by more than 50 per cent. The FirstGroup board disagrees. “It is not compelling and contains a number of structural flaws and inaccuracies,” they say. Liberum Capital analyst Gerald Khoo agrees, he argues that it is better to restructure underperforming assets rather than sell when they are cyclically depressed. And it’s unclear who would buy them anyway.
