First Group shares up as bus firm confirms £500m payout
Shares in transport operator First Group rose 4.0 per cent this morning as the firm confirmed it would return £500m to shareholders through a tender process.
In a statement ahead of today’s AGM, the FTSE 250 firm said that it was trading in line with expectations for the year so far.
It said that bus passenger levels were at 65 per cent of pre-pandemic levels, and “we expect this to increase further as the autumn terms for schools and then universities get fully underway”.
First Group first announced the payout back in July when the £3.3bn sale of its US businesses was approved by shareholders.
It followed a noisy campaign to disrupt the sale by investor Coast Capital, a longtime thorn in the side of First’s management.
Today it detailed how it would go about returning cash to shareholders. It said: “Having considered various methodologies and consulted with a range of shareholders, the board has concluded that a tender offer is the optimal way to return such a significant amount in a short space of time, while giving shareholders who wish to retain their current investment in First Group the option to do so.
“Under the tender offer, qualifying shareholders will be invited to tender some or all of their shares in the Group at a price per share that will be announced at the time of launch.
“If the full amount is not returned to shareholders by way of the tender offer, the Group intends to return any remaining surplus cash in a second phase, principally by way of a special dividend with an accompanying share consolidation, supplemented by on-market share buybacks.”
Today’s AGM also marks the final act of chief executive Matthew Gregory, who steps down after less than three years in the top job.
Along with dealing with Coast’s frequent interventions, his tenure coincided with the worst year for public transport in memory amid last year’s Covid-19 lockdowns.
First Group is in the process of finding a new chief executive. In the meantime, chairman David Martin will act as executive chairman.
He said: “The vital role of public transport is clear and the policy backdrop has never been more supportive.
“With a well-capitalised balance sheet and an operating model that will support an attractive dividend for shareholders commencing in 2022, I am confident that FirstGroup is well-placed to deliver sustainable value creation as a focused UK public transport leader.”