FirstGroup said it has received “significant interest” after starting a formal sale process for its North American bus contract businesses.
The transport giant, which has come under fierce pressure from an activist investor in recent days, confirmed it is looking at offloading the First Student and First Transit businesses.
David Martin, First Group’s chairman, said: “We firmly believe that a sale of these assets is the best way to unlock material value for all FirstGroup shareholders, having completed a detailed review and analysis with advisers appointed by the board to explore all options.”
On Monday, activist investor Coast Capital accused FirstGroup bosses of failing to properly engage on its plans to sell the company’s North American bus and coach division.
The fund, which owns a 10% stake in the business, said “unless the board announces a separation”, Coast will demand a special shareholder meeting for investors “to vote on an immediate de-merger of the North American operations”.
— FirstGroup plc (@FirstGroupplc) March 11, 2020
FirstGroup, which operates Great Western Railway, South Western Railway, TransPennine Express and Avanti West Coast, said in December a sale of its US businesses was under way.
It also runs the Greyhound bus business in the US, but said the arm has seen trading slip 3.5% in the year-to-date amid a “difficult trading environment”.
Meanwhile, the FTSE 250 company said current group trading is up 7.5% in the year-to-date with no significant impact from Covid-19 seen yet.
Mr Martin added: “Despite near-term uncertainty in the wider markets, there remains a fundamental need for people to travel safely and conveniently for business, education, social or recreational reasons which is essential to sustainable and thriving economies and communities.
“We are resolutely focused on delivering our plans – including the portfolio rationalisation strategy – in the best interests of all shareholders.”
The company added that its UK rail business has seen trading improve following the introduction of new trades and timetable changes for its Great Western Railway line.