FirstGroup Puts U.S. School Bus, Shuttle Units Up for Sale

(Bloomberg) --

FirstGroup Plc, under pressure from activist investors, is exploring options including a possible disposal of its North American school bus and transit divisions, extending a breakup strategy that already encompasses a planned sale of the iconic Greyhound brand.

The Aberdeen, Scotland-based group has appointed Rothschild to help advise on the sale of its First Bus and First Transit divisions, the company said in response to enquiries from Bloomberg. The business could be valued at more than $5 billion, according to activist investor Coast Capital LP.

Coast Capital and Robert Tchenguiz have been pressing for a breakup since FirstGroup rejected a takeover bid from Apollo Global Management last year, saying the current portfolio that includes U.K. train services doesn’t make sense. The transport company revealed last month it had swung to a first-half loss, further ramping up the pressure on Chief Executive Officer Matthew Gregory.

“While we welcome the moves to dispose of the North American assets we are aware of there being good interest in this business and we want a transparent process to be implemented as soon as possible, led by people with expertise in this process,” said Coast Capital Chief Investment Officer James Rasteh.

First Bus is a yellow school-bus operation serving school districts. First Transit, the other division under review, includes fixed-route bus services, para-transit bus and services such as shuttle runs and vehicle-maintenance. Analysts have valued the business at more than 2.6 billion pounds ($3.5 billion).

The company said in the statement it’s progressing with the sale of Greyhound -- worth 157 million pounds, according to Citigroup -- and seeking to cut costs at First Bus in the U.K. before launching any formal auction of that business.

Shares of FirstGroup rose 5.9% to 125.40 pence in London, taking gains this year to 50% and giving the company a market value of 1.52 billion pounds.

Rothschild wasn’t available for immediate comment.

To contact the reporters on this story: Christopher Jasper in London at cjasper@bloomberg.net;David Hellier in London at dhellier@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Andrew Noël

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