FirstGroup PLC (LON:FGP ) is battle to sell its US businesses with the shareholder than proposed the move now saying it will vote against it.
The bus and train group announced last month it had agreed terms for the sale of US Transit and Student operations for £3.3bn.
Now US fund group Coast Capital has said it will vote against the deal, describing it as a “suboptimal and incomplete process at an inopportune time£ and “made worse by a distribution of proceeds which sees long-suffering shareholders receiving just 12% of proceeds”.
Coast added that shortly before the announcement of the sale it presented its own proposals, the value of which it claims that FirstGroup’s own adviser admitted: “Could be … 25% greater than the proposed EQT deal”.
The US group added that the FirstGroup board has categorically refused to entertain or study the more attractive alternatives. Coast has a 13.6% stake in FirstGroup.
Liberum added agrees with Coast that is scope for more of the cash to be returned to shareholders.
Any cash generation since the interim results could reasonably be added too (Coast Capital estimates this at £50mln).
The broker cautions, however, that this would require confidence that the pandemic has run its course.
“Finally, we note that FirstGroup has not settled on a method to return cash to shareholders, although we see a tender offer of some sort as offering advantages over a special dividend (tax-inefficient) or share buyback (not immediate, constrained by trading liquidity).”
FirstGroup shares rose 0.75% to 81.1p.