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MARKET REPORT: First Group deal ‘stinks to the heavens’ says Coast

The deal by First Group to offload its sprawling US transport business is hanging in the balance.

The company’s biggest shareholder, Coast Capital, which owns nearly 14 per cent, has blasted the £3.3billion proposal, saying that it ‘stinks to the heavens’.

Last month Aberdeen-based First Group said it would sell the US transport arm to investment fund EQT Infrastructure. 

First Group said it would sell its US arm to EQT Infrastructure. The deal includes First Student, which operates the yellow school buses, and First Transit, which offers contract bus services 

The deal includes First Student, which operates the yellow school buses, and First Transit, which offers contract bus services.

And it will also see First Group pump £336million into its pension scheme. But now US hedge fund Coast Capital plans to vote against it when it is put to shareholders at a one-off meeting.

Coast Capital founding partner James Rasteh described the EQT sale as leaving ‘billions of dollars on the table’. He added: ‘The deal crystallises value destruction and is a punishment for investors.’

It is not the first time that Coast has agitated at the group. Two years ago it launched an unsuccessful bid to clear out the board – after which then chairman Wolfhart Hauser stepped down – and demanded the US and UK businesses be separated.

Stock Watch – Sanderson Design Group

A major Japanese interiors firm will sell William Morris wallpaper across Asia under a licensing agreement with Sanderson Design Group.

In a four-year deal, Sangetsu can sell designs from the Morris & Co brand, founded by famous Victorian textile designer William Morris in the 1860s. AIM-listed Sanderson bought the business and right to use the name in 1940.

Shares in Sanderson, which has worked with Sangetsu since 2017, rose 8.5 per cent, or 11.5p, to 147p.

First Group said the sale ‘achieves a full strategic value’ and followed a ‘comprehensive and competitive process involving discussions with a large number of potential buyers’. Shares closed up 3.6 per cent, or 2.65p, at 76.65p.

Investors cheered the restart of a bumper cash return programme by the Johnnie Walker and Baileys maker Diageo following a sales boom.

The world’s biggest distiller last April to hit the pause button on plans to return £4.5billion to shareholders by 2022.

But in a surprise announcement yesterday, boss Ivan Menezes told investors they could expect to receive £500million through share buybacks this year and £1billion by the end of the 2022 financial year.

In July 2019, FTSE 100-listed Diageo kicked off a scheme to return £4.5billion to investors by 2022, and had repurchased £1.25billion worth before last spring.

It has now pushed the deadline to reach £4.5billion back to 2024.

Profit growth is likely to be more than 14 per cent this year, and it rose 3.4 per cent, or 108.5p, to 3298.5p.

Diageo was the second-biggest riser on the Footsie but was pipped to the top spot by BP, which climbed 3.5 per cent, or 10.7p, to 315.3p, after the International Energy Agency forecast a huge rebound in oil demand.

The news sent crude prices 1.8 per cent higher to just shy of $70 a barrel.

BP’s peer Royal Dutch Shell rose 3 per cent, or 40p, to 1353.8p.

The boost from the oil majors helped the FTSE 100 get back above the 7000 level after a bruising sell-off at the start of this week undid recent gains. 

It closed 0.8 per cent higher, up 56.64 points, at 7004.63, while the FTSE 250 slid 0.3 per cent, or 59.3 points, to 22,107.84.

Just Eat Takeaway struggled, however, after rival Delivery Hero said it would return to Germany. Just Eat, which bought Delivery Hero’s German arm two years ago, has been the dominant group there for years. It sank 8.3 per cent, or 567p, to 6247p.

On the mid-cap index, paving and concrete maker Marshalls jumped 1 per cent, or 7.5p, to 730p after upgrading profit forecasts, as people sprucing up their back gardens led to a leap in sales, with a 46 per cent rise in revenues to £191million in the first four months of the year.

And airport services group John Menzies rose 4.5 per cent, or 14p, to 324.5p after it raised £22million by selling new shares.

The baggage handler is preparing for the gradual return to business as usual as holidays start up again this summer.

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