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.
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