FirstGroup under fresh pressure to demerge US unit

FirstGroup operates school bus services in the US

Transport giant FirstGroup is facing renewed pressure from an activist investor to separate off its North American operations.

Coast Capital, which holds more than 10% of FirstGroup's shares, said it planned to call an extraordinary general meeting to force the issue.

Coast has long pushed for FirstGroup to demerge its First Student and First Transit units from its UK operations.

It argued such a move would "create immediate value for shareholders".

Aberdeen-based FirstGroup said it would update the market on its plans for North America on Wednesday.

Late last year, the transport group said it would "explore all options" for its North American contract businesses, including a potential disposal.

It has been trying to sell its Greyhound US intercity bus service since last May, arguing that the unit had "limited synergies" with its other North American businesses.

FirstGroup has been trying to sell off its US-based Greyhound unit since last May

In a statement on Monday, Coast said that since the review of North American operations was announced three months ago, shareholders had heard nothing from the company or its board, while the group's share price had declined by 20%.

It added: "Unless the board announces a separation, Coast Capital intends to requisition an EGM in order to provide investors with the opportunity to vote on an immediate demerger of the North American operations.

"Coast Capital believes that in the absence of a full divestment notably above book value, the company must pursue a listing of these businesses on a North American exchange and the LSE (London Stock Exchange).

"This will allow UK investors to realize value from their investment in the company, and enable new North American investors, public or private, to buy into the North American operations."

In noting Coast's statement, FirstGroup said: "The board agrees that there is material value to be unlocked within the group and is intent on delivering this in the best interests of all shareholders.

"Our scheduled trading statement will be published on Wednesday 11 March, in which we will update the market on trading since our half-year results in November in addition to the progress of our strategic plans, including in relation to our North American contract businesses."