Greyhound selloff proposal rejected by FirstGroup

<p>FirstGroup has rejected a plan to sell off its Greyhound trans-American bus service.</p>

FirstGroup has announced it has turned down a proposal to sell off its Greyhound trans-American bus service, with the company's share price up as a result.

Hedge fund Sandell Asset Management suggested that FirstGroup should sell Greyhound – which also operates a school bus service in the US – to pay down some of its debts.

But FirstGroup said in a statement that the proposal had "flaws and inaccuracies" and was "not compelling" enough to consider further.

FirstGroup confirmed earlier in the week that John McFarlane will be moving from Aviva to take up the chairman position in the new year. Mr McFarlane will join as a non-executive director with immediate effect and will be taking over the job from outgoing head Martin Gilbert. The company had been searching for a replacement for Mr Gilbert for the last six months.

Sandell, which currently owns about three per cent of FirstGroup, has held extensive discussions with the company regarding the sale of the Greyhound operation, with the transport firm admitting it had "engaged" with Sandell several times over the plans.

Future of FirstGroup

FirstGroup announced recently that it is to continue with the current strategy, set out in May, which "will deliver superior value for shareholders compared to alternatives that were considered in detail earlier this year, and which remain under review".

John Sievwright, senior independent non-executive director at FirstGroup, paid tribute to Mr Gilbert earlier this week on behalf of the board of directors and stated that Mr McFarlane "is an outstanding leader with extensive international experience and a track record of leading strategic change and value creation that speaks for itself".

The share price of FirstGroup has risen strongly over the course of this morning (December 10th) on the London Stock Exchange and by 12:01 GMT stocks were around four per cent higher compared to the start of the session.

FirstGroup stocks are now selling for 120.60 as the share price of the firm continues to bounce back from its 52-week low of 90.30.

Find up to date information on the FTSE 100 and spread betting strategies at City Index

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.