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FirstGroup and rebel investor Coast Capital turn up the heat over sale of Aberdeen company’s ‘crown jewels’

A driver and bus in FirstGroup's North American First Transit business.
A driver and bus in FirstGroup's North American First Transit business.

FirstGroup has urged shareholders to vote in favour of the sale of two of its North American divisions amid an increasingly heated spat with its biggest investor.

The Aberdeen-based transport giant saw its shares lift 1,2% to 83.5p after it insisted its £3.3 billion deal to sell its First Student and First Transit businesses to Swedish private equity group EQT Infrastructure offered “full value” to all of those with a stake in the business.

It will leave FirstGroup with only its iconic Greyhound coach business waiting to be sold across the Atlantic as it looks to wholly focus on its UK operations.

Shareholders are due to vote on the deal at a general meeting of the company in London next Thursday (May 27).

Coast Capital, which owns nearly 14% of FirstGroup, has accused the company of bad timing with the sale – in the middle of a pandemic – and making “misleading claims” about the “destructive planned disposal of crown jewel assets.”

FirstGroup hit back today (May 21), rebutting what it called “inaccurate statements” by New York-based Coast.

Highlighting “numerous inaccuracies” in Coast’s latest missive to the market, FirstGroup said the rebel shareholder’s figures for earnings to transaction value were skewed by factors including “materially different” exchange rates.

This credible and executable transaction is a transformational opportunity for the group.”

David Martin, FirstGroup chairman

Coast’s claim the price tag for the deal reflects a “negative premium” on the book value of assets being sold is also based on inconsistent use of figures and key ommissions, such as the £1.4 billion of goodwill wrapped up in the overall value of the company, FirstGroup said.

In addition, the bus and rail firm highlighted its advice from international financial heavyweights such as Rothschild & Co, JP Morgan Cazenove and Goldman Sachs in relation to the sale.

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FirstGroup chairman David Martin said: “Shareholders have waited long enough for change, and this credible and executable transaction is a transformational opportunity for the group to progress to a new and exciting phase of its development.

“When I joined the board in August 2019 I clearly stated my objective was to unlock the value within the group.

“Following a full strategic review, we undertook a comprehensive and well-publicised sale process, which achieves a full value and enables the group to return value to shareholders, address its legacy challenges and strengthen its position for the future.”

FirstGroup’s iconic yellow school bus First Student division is one of the businesses being sold.

In its latest public statement on Wednesday (May 19), urging other shareholders to oppose the sale, Coast said: “The middle of a pandemic, when schools were indefinitely shut, uncertainty surrounding Covid was at its height, presented a very inadequate time for the board to sell the largest school bus and transit operations in North America.

“The chairman of the company assured Coast Capital that the backdrop was not a concern and that he would be successful in disposing of these operations at
more than 8x normalised Ebitda (earnings before interest, taxes, depreciation, and amortisation. In fact, the EQT bid valued our crown jewel assets at just 6.5x.”

‘Rushed, destructive deal’

Coast added: “The board has categorically refused to fully consider transactions other than an outright sale, which would immediately provide much greater upside for shareholders.

“In conclusion, Coast Capital, along with many fellow shareholders, fail to understand this board’s insistence on a rushed, destructive deal which would crystalise permanent value transfer, during a window in which they refuse to engage with any other buyers.

“This amounts to a clear breach of fiduciary responsibility which should not be tolerable to any stakeholder.”


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  • First Student is the largest provider of home-to-school student transport in the US and Canada, with a fleet of 43,000 yellow school buses.
  • First Transit is one of the largest providers of outsourced transit management and contracting services in North America.
  • FTSE 250-listed FirstGroup has said it will bank £2.19bn of initial net proceeds from the sale after deducting self-insurance liabilities, valued at around £390 million, and about £505m in “debt and debt-like items, net working capital and other adjustments”.
  • The company will use its cash boost to settle debts and make sure it has “sufficient means” for the future development of its retained businesses. It will also make a £336m contribution to its UK Bus and group pension schemes.