FirstGroup boss quitting amid investor anger over sale of US businesses

FirstGroup boss quitting amid investor anger over sale of US businesses
US hedge fund Coast Capital called for Matthew Gregory to resign after it said the sale of First Student and First Transit was too cheap.

The boss of bus and rail firm FirstGroup is quitting after less than three years in the post amid investor anger over the sale of two US businesses.

FirstGroup said chief executive Matthew Gregory will leave after the group’s annual general meeting on September 13.

It comes just a day after FirstGroup’s biggest shareholder, New York-based hedge fund Coast Capital, called for Mr Gregory to resign 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.

Chairman David Martin – a former chief executive of rival transport group Arriva – will become executive chairman until a successor is appointed.

Mr Gregory said he was leaving to “move on to new opportunities”.

Just over six in 10 shareholder votes were in favour of the deal to offload the US divisions 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.

FirstGroup has 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

Matthew Gregory, FirstGroup chief executive

The announcement of Mr Gregory’s departure came as FirstGroup revealed underlying annual pre-tax profits slumped to £39.4 million from £109.9 million previously after a tough year for public transport amid the pandemic.

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.

On a statutory basis, the group swung to a pre-tax profit of £115.8 million in the year to March 27 from losses of £299.6 million the previous year.

FirstGroup confirmed plans to also sell its Greyhound coach business in the US continue, but said the sale had been impacted as the division has taken a knock from the pandemic.

Mr Gregory said: “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.”

Mr Martin said Mr Gregory had delivered on the plan to streamline the group and had “adeptly responded to the unprecedented challenges created by the coronavirus pandemic”.

He 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.”

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