First Group bus sale squeaks through as investors give green light
Shareholders have this afternoon narrowly approved the sale of First Group’s US operations to Scandinavian fund EQT despite a strident campaign against the deal.
At today’s AGM 61.3 per cent of investors backed the $4.6bn (£3.3bn) deal, with 38.7 per cent voting against it.
The results means that Coast Capital’s attempts to derail the sale of First Transit and First Student has failed.
The hedge fund called for a recount, saying that the deal was a “most imprudent business decision”.
Shares in First Group fell 4.0 per cent immediately after the deal was approved.
Coast, which owns nearly 14 per cent of First Group, had long backed the sale of the assets, but said that the EQT deal undervalued the businesses.
The New York-based fund rallied a number of other investors to its cause, including 12-per-cent owner Schroders and proxy group Glass Lewis.
Nevertheless, a simple majority was enough for First Group to get the sale, which has been 12 months in the making, over the line.
In a statement, chairman David Martin said: “We welcome the support of shareholders in approving the sale of First Student and First Transit. Through this transaction, FirstGroup will return value to shareholders, address its long-standing liabilities and make a substantial contribution to its pension schemes.
“The vital role of public transport in the UK has never been clearer, and FirstGroup will be in prime position to deliver on its goals with a well-capitalised balance sheet and an operating model that will support an attractive dividend for shareholders.
“I and the whole Board take very seriously our responsibility to understand the different views and perspectives of investors, and recognise that a number of shareholders did not vote in favour of today’s resolution.
“As FirstGroup enters a new and exciting phase in its development, I look forward to continuing an open and constructive dialogue with all shareholders as we look to the future.”
In response, Coast Capital said: “Coast is saddened to note this transaction, which is a most imprudent business decision, has already led to a meaningful decline in the share price since the announcement was made (4 per cent as of time of comment).
“Further, Coast notes that only 51.9 per cent of investors voted in favour, 48.1 per cent did not vote or voted against. A recount is necessary.
“In spite of numerous representations made by Coast and by other institutional investors and
advisors to First Group’s board and management team, in which concerns were raised about the
rushed, opaque, poorly timed, and uncompetitive sales process, the low valuation of the deal,
the lack of fairness opinion, the company continued to press ahead with this value destroying
transaction.
“It is no surprise therefore that the market is not positively greeting the sale of crown jewel assets at less than book value.”