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FirstGroup looks at selling all North American businesses

Published: 03:18 16 Dec 2019 EST

FirstGroup - FirstGroup appoints advisors to sell North American businesses

FirstGroup PLC (LON:FGP) has appointed advisors to “explore all options” for its North American businesses, including a potential sale.

These include First Student and First Transit, as the FTSE 250-listed group is in formal talks with potential buyers for the Greyhound coach division, announced in May as part of a ‘rationalisation’ plan.

READ: FirstGroup investor Tchenguiz accuses board of “misleading” investors

The news is likely to please some of the transport firm’s largest shareholders, such as US hedge fund Coast Capital, which has been pushing for a break-up of the business.

First Student and First Transit are the “largest and most valuable” arms of the company, said analysts at Liberum, meaning “the bulk of the group is effectively for sale at present”.

The broker expressed concern, as management seems to have changed the strategy from “an excessive number of organic turnarounds” to “an excessive number of disposals”, implying there has been “no progress” in the rationalisation plan announced seven months ago.

“Prolonged sale processes risk disrupting the underlying trading of the businesses, with staff and leadership unsettled and customers facing uncertainty over who they are dealing with,” analysts said in a note.

“The latter issue is particularly pertinent for the Student and Transit businesses, which are entirely contract based.”

Shares inched up 1% to 119.8p at the opening bell.

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