FirstGroup has rejected a call by a major investor to retreat from the United States in order to focus on its UK operations.
New York-based Sandell Asset Management, which holds a 3.1% stake in the UK-listed company, wants FirstGroup to offload its US inter-city bus service Greyhound and spin off the rest of its North American arm, which includes school bus services for six million students. It believes the changes would strengthen the group’s balance sheet and better prepare the company for the upcoming round of UK rail franchise bids, as well as enabling it to invest in the turnaround of its UK bus arm.
But FirstGroup said the proposals were ‘not compelling and containing structural flaws.’ The group said it remained committed to existing plans announced in May under which it will pour £1.6bn into a four-year investment programme and tackle debts of nearly £2bn.
FirstGroup shares rose 3% after Sandell said it would lobby other shareholders to support proposals.
Chief executive Tom Sandell said: “Our established track record in company analysis and our sector expertise tells us that FirstGroup can turn around its historic poor performance by focusing on its UK rail and bus businesses.”