Aberdeen, UK-based rail company FirstGroup Plc said it has opposed a plan proposed by a hedge fund shareholder to break up the firm, a Bloomberg report said. In a statement, US-based hedge fund Sandell Asset Management has urged the transport firm to separate the group and dispose of its assets.
FirstGroup, owner of the Grehound bus brand, said, "The group has engaged with Sandell several times, reviewed their proposal in detail, and believes that it is not compelling and contains a number of structural flaws and inaccuracies." A Financial Times report had said Sandell had asked the company through a letter to sell its US businesses. These businesses include trans-American bus service Greyhound and its school bus division.
According to Bloomberg data, Sandell has a 3% stake in FirstGroup. The rail company operates trains plying in Scotland, as well as those that run from London to Western England. The report said its acquisition of Laidlaw, the operator of Greyhound bus, in 2008 brought FirstGroup's net debt to £2.2 billion or $3.6 billion. In May this year, FirstGroup stopped giving dividend payments to concentrate on a rights offer, the report said.
FirstGroup stated, "The current multi-year program that was set out in May, with clear objectives to improve growth and restore a profile of consistent returns and cash generation, will deliver superior value for shareholders. The board is open to all means of enhancing long-term value."
Bloomberg reported that the shares of FirstGroup have dropped 32% this year, putting the value of the company to just £1.4 billion. The company added that they have planned a capital markets day on January 23, which will be participated in by incoming Chairman John McFarlane. He will assume his new role on January 1, replacing predecessor Martin Gilbert who had held the post for 17 years, the report said.
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