FirstGroup boss to quit amid tussle with activist investor
US hedge fund Coast Capital called for Matthew Gregory to resign over the sale of First Student and First Transit.
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Your support makes all the difference.The boss of FirstGroup is quitting in the wake of demands for his resignation from the transport firm’s biggest shareholder over a deal to sell two US businesses.
FirstGroup said chief executive Matthew Gregory will leave following its annual general meeting on September 13, after less than three years in the post.
It comes just a day after New York-based hedge fund Coast Capital called for Mr Gregory, and two non-executive directors, to step down after it said the £3.3 billion sale of First Student and First Transit in the US was too cheap and poorly timed at the peak of pandemic disruption.
Speaking to the PA news agency, Mr Gregory denied his planned departure was due to pressure from Coast Capital.
He said: “It’s absolutely nothing to do with that whatsoever.
“It’s the right time for me to step down and for someone else to take (FirstGroup) on to the new chapter.”
He insisted the deal was at a “good price and a long-term valuation”.
“Having delivered the substantial portfolio rationalisation strategy and with FirstGroup now positioned to emerge from the pandemic as a resilient and robust business, I have decided the time is right for me to move on to new opportunities,” he said.
The deal to offload the US divisions was approved with a marginal majority after receiving backing from just over six in 10 shareholder votes in May following opposition from the group’s two biggest shareholders.
FirstGroup has since tried to appease shareholders by announcing it will return £500 million to them from the sale of the US school bus and transit divisions.
But this was not enough to win over disgruntled Coast.
Having delivered the substantial portfolio rationalisation strategy and with FirstGroup now positioned to emerge from the pandemic as a resilient and robust business, I have decided the time is right for me to move on to new opportunities
The latest campaign against the FirstGroup leadership follows similar calls by Coast for the boss’s scalp in 2019.
FirstGroup chairman David Martin a former chief executive of rival transport group Arriva whose name was put forward to join FirstGroup’s board by Coast Capital in 2019, will become executive chairman until a successor to Mr Gregory is appointed.
The announcement of Mr Gregory’s departure came as FirstGroup revealed underlying annual operating profits for the remaining businesses in the group rose 46% to £101.9 million, helped higher by cost cutting.
Group-wide underlying pre-tax profits, including discontinued businesses, slumped to £39.4 million from £109.9 million in the year to March 27, while on a statutory basis it swung to a pre-tax profit of £115.8 million from losses of £299.6 million the previous year.
FirstGroup said it was “encouraged” by improving demand for bus travel as restrictions ease, with passenger numbers now at about 60% of pre-pandemic levels.
It hopes this will recover further to between 80% to 90% of pre-pandemic levels during the first year after social distancing restrictions on public transport come to an end.
FirstGroup confirmed plans to also sell its Greyhound coach business in the US will continue, but said the sale had been affected as the division has taken a knock from the pandemic.
Mr Martin said: “Matthew has made a significant contribution to FirstGroup since joining in 2015, initially as chief financial officer and then stepping forward to take up the post of chief executive in 2018.”