In an ongoing bitter struggle with ‘activist investors’, FirstGroup has proposed a radical restructuring which would see it focus in future on its North American business First Student and First Transit and the offloading of its UK-based First Bus operations and an uncertain future in UK rail beyond the existing franchises, as well as the sale of its Greyhound operations.
First Group has bowed to pressure from US-based Coast Capital and called an EGM on 25 June to consider the potential replacement of six directors with nominees from Coast. In announcing the move, First has strongly defended its proposed restructuring led by Matthew Gregory who took over as chief executive of the group last November.
The decision to sell First Bus, or as the group puts it “pursue structural alternatives to separate FirstBus from the Group,” while not wholly unexpected given the challenges the group has faced in recent years, will signal a major potential shake-up of the UK’s entire bus industry, coming on the back of the announcement by Deutsche Bahn to sell its Arriva bus operations.
The move to offload First Bus drew a quick reaction from unions involved in the business with both Unite and RMT warning First and potential buyers of the operations that it would fight hard to protect its members’ interests.
First is not taking the attack by Coast Capital lightly, and has issued a robust statement highlighting the current transport experience of its current board and leadership. It pours particular cold water over the proposal from Coast that former transport minister Steven Norris be appointed to the board, pointing out that Norris’ experience with Capital Citybus was more than 20 years ago and represented a company that had less than 10 per cent of the First fleet size. The statement also points out that Coast Capital have failed to mention in Norris’ biography that he was chairman of Jarvis plc for the six years before it went into administration, resulting in pension schemes being placed into the Pension Protection Fund.
First describes Coast Capital as an “opportunistic, self-interested player that is only focused on short-term gains” and says it is a fund with “no track record or experience running any business similar to FirstGroup, and it has made a number of scatter-gun, inconsistent and unusual claims and proposals to the Company over the past 12 months”.