FirstGroup (LON:FGP) today rejected calls to sell off its US business, which includes the Greyhound bus service.
New York-based Hedge fund Sandell Asset Management, which owns 3% of FirstGroup’s shares, argued that the British travel company should dump Greyhound and use the funds to pay down debt.
FirstGroup said it has engaged with Sandell several times, reviewed the proposal in detail and decided “it is not compelling and contains a number of structural flaws and inaccuracies”.
It stressed in a stock exchange statement that its current programme outlined in May will deliver superior value for shareholders compared to alternatives it looked at, with the aim of improving growth and restoring the company’s profile of returns and cash generation.
The company took charge of Greyhound and the school bus business when it acquired Laidlaw in 2007, but the deal left it with large debts.
FirstGroup shares rose 2.5% to 119p on Wednesday. They are still down 43% in 2013 after May’s £615mln fundraising and after it cancelled its dividend.