>>> FirstGroup activist shareholder West Face Capital calls for strategic review

FirstGroup activist shareholder West Face Capital calls for strategic review of options including sale, break-up or spin-off of North American business - report
15 MAY 2018
FirstGroup’s [LON:FGP] board has received a letter from the activist investment firm West Face Capital calling for a strategic review of options including a sale, break-up or a spin-off of its North American business, The Daily Telegraph reported. The newspaper quoted from the letter, which was seen by the newspaper.
In the letter, West Face criticised the FTSE-100 transport group’s board for what it claims is its failure to remedy “chronic” underperformance and said the board’s inaction left FirstGroup vulnerable to “opportunistic” takeover offers from the private equity firm Apollo Global Management.
West Face owns a 2.5% shareholding in FirstGroup and is one of the transport company’s 15 biggest investors, the item noted.
The activist investor said it has presented proposals aimed at improving FirstGroup’s performance four times in the past year, and that FirstGroup has rejected all of its proposals without providing a “compelling explanation,” the report continued.
FirstGroup chief executive Tim O’Toole dismissed calls for a review of strategic options in July 2017, the newspaper said.
West Face claimed that the CEO “has failed” and that FirstGroup has performed worse than its peers.
Apollo submitted two offers, although FirstGroup’s board would not give details of the price. The buyout group abandoned its proposed offer last week, prompting a 10% fall in FirstGroup’s share price, the report noted.
According to West Face, one third of FirstGroup shareholders think the business is undervalued, the item continued. West Face has demanded that FirstGroup form a subcommittee before its AGM on 17 July, the article added.
The report went on to quote FirstGroup, which said on Monday, 14 May that the board will listen to all suggestions for improving value in the long term and that it values input from shareholders. FirstGroup added that its board thinks the expertise and scale of each of its businesses has “considerable value.”
West Face refused to comment, the item said.
FirstGroup’s share price closed 4.2p up at 109.6p in London on Monday, giving the company a market capitalisation of GBP 1.33bn (EUR 1.51bn).