(Alliance News) - Shareholders in train and bus operator FirstGroup PLC will have GBP500 million returned to them after the company confirmed plans for a tender offer on Wednesday.
The Aberdeen, Scotland-based transport company opened a tender offer for shares at 105 pence per share. Shares were up 6.7% at 102.60 pence on Wednesday morning in London.
Importantly, FirstGroup highlighted that activist shareholder Coast Capital Management has agreed to support the plan and tender all its shares. Coast has previously opposed decisions made by the FirstGroup board including the sale of its US school bus and transit divisions in May, which it described at the time as a "destructive disposal".
The buyback comes after FirstGroup sold its First Student and First Transit businesses in the US to EQT Infrastructure, part of Swedish private equity firm EQT AB, for USD3.12 billion in April. Coast Capital LLC had complained that FirstGroup had sold its "crown jewel" at a "negative premium" and was planning at the time to return only 12% of the proceeds to shareholders.
Additionally, last week FirstGroup said it had sold its US coach business Greyhound Lines to a subsidiary of FlixMobility. This completed the company's refocus back on the UK.
"This marks the culmination of our portfolio rationalisation strategy, as announced in December 2019, which has refocused the group on its leading UK public transport businesses," commented FirstGroup Executive Chair David Martin.
"The premium for the tender offer reflects our confidence in our future prospects, as well as the substantial further sums expected to be realised by the group over time from the disposals completed this year," Martin added.
By Will Paige; willpaige@alliancenews.com
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Firstgroup (FGP)