The Aberdeen-headquartered company has proposed returning £500 million to shareholders, from the sale of the US school bus and transit divisions. The figure is an increase from the previously proposed £365m shareholder payout.
Just over six in ten shareholder votes were in favour of the £3.3 billion deal in May following opposition from the group’s two biggest shareholders.
Although enough for the sale to go through, the vote was far from an endorsement of the plan.
Coast Capital, an activist investor and the biggest single shareholder in bus and rail operator First, had said the deal was too cheap for buyer EQT Infrastructure.
It added: “In spite of numerous representations made by Coast and by other institutional investors and advisers to FirstGroup’s board and management team, in which concerns were raised about the rushed, opaque, poorly timed, and uncompetitive sales process, the low valuation of the deal, the lack of fairness opinion, the company continued to press ahead with this value-destroying transaction.
“It is no surprise therefore that the market is not positively greeting the sale of crown jewel assets at less than book value.”
First said the additional £135m it plans to return to shareholders has been made possible after its cash flow improved while pandemic restrictions eased in the UK’s bus and rail markets.
It also got more cash proceeds than expected from the deal, and had benefited from further clarity in some contracts.
Chairman David Martin said: “We are pleased to announce the completion of the sale of First Student and First Transit and a significant increase in the proposed return of value to shareholders this autumn. This delivers on our strategic objective and creates a focused and stronger business with a bright future.”
He added: “The vital role of public transport in the UK has never been clearer, and with the most supportive policy backdrop in decades coupled with our strong credentials, FirstGroup is in prime position to deliver on its goals with a well-capitalised balance sheet and an operating model that will support attractive dividends.”