First Group: General Discussion

[Volvodart]

Unsolicited, conditional proposals from I Squared Capital Advisors (UK) LLP

https://otp.tools.investis.com/generic/regulatory-story.aspx?newsid=1588002&cid=858

FirstGroup plc

Statement re. unsolicited approach

The Board of FirstGroup plc ("FirstGroup" or the "Company") notes the recent share price movement. The Company has received a series of unsolicited, conditional proposals from I Squared Capital Advisors (UK) LLP ("I Squared") in relation to a possible offer to acquire the entire issued, and to be issued, share capital of the Company.

The Board together with its advisers, is currently evaluating the latest approach, received yesterday evening, which provides for a cash component of 118 pence per share and a contingent right to up to a further 45.6 pence per share based on the outcome of the First Transit earnout and the net proceeds realised from the Greyhound legacy assets and liabilities. The previous approaches were all unanimously rejected by the Board.

FirstGroup shareholders are strongly advised to take no action in relation to the approach from I Squared.

A further announcement will be made if and when appropriate.

 

[TheGrandWazoo]

Unsolicited, conditional proposals from I Squared Capital Advisors (UK) LLP

https://otp.tools.investis.com/generic/regulatory-story.aspx?newsid=1588002&cid=858

118/share would seem to undervalue it, especially as it has now repositioned itself financially after the divestment.

Oddly, I Squared appears to be more of an infrastructure investor so this is a bit off its usual patch

 

[dazzler]

First York certainly use it, from their Twitter feed today.

I noticed it on the app a week or so ago, when the bus I was intending to catch home from work showed up in the app as cancelled.

 

[317 forever]

Although plenty of buses still need repainting from Olympia to local liveries, I notice that most areas have introduced local liveries recently.

 

[stevenedin]

I think local liveries are a bad idea. It makes it more difficult to move buses around and if they do it doesn’t keep consistency.

Also it doesn’t give people the impression that it is the same company so when travelling to other places that have First operations it’s not instantly clear that the buses are First. People might have used them due to the fact that it is a company that they know already.

 

[GusB]

I think local liveries are a bad idea. It makes it more difficult to move buses around and if they do it doesn’t keep consistency.

While I agree that it makes it easier to move vehicles around if there's a corporate livery, I disagree that local liveries are a bad idea overall. I'd rather a company putting some thought into a local identity because it makes them look less than a faceless corporation. First have recognised this in places like Cornwall.

Also it doesn’t give people the impression that it is the same company so when travelling to other places that have First operations it’s not instantly clear that the buses are First. People might have used avoided them due to the fact that it is a company that they know already.

Fixed that for you

Seriously, though, why would this matter? Unless you have tickets that work across a whole group of companies, and a choice of operators in the area that you're travelling to, it's largely irrelevant.

 

[overthewater]

This has gone past a few people? First Group reject the offer:

FirstGroup rejects £1.23bn offer from private equity bidder

UK’s biggest train operator says proposal from I Squared Capital ‘significantly undervalues’ business

www.ft.com

FirstGroup has rejected a £1.23bn takeover bid from a private equity firm, saying it “significantly undervalues” the UK transport company. The FTSE 250 group, which is the UK’s biggest train operator, confirmed last month that it had received a series of unsolicited, conditional proposals from I Squared Capital, a private equity firm that focuses on global infrastructure investments. The UK bus and train company said at the time that it was considering the offer, consisting of a cash component of 118p a share and a “contingent right” of up to 45.6p a share. The contingent element was based on potential payouts from the sale last year of FirstGroup’s US transit and Greyhound bus businesses. The latest takeover bid came after FirstGroup emerged from a testing period, with pressure from activist investors, management changes, and the sale of its US assets. However, FirstGroup said on Thursday that it had “unanimously rejected the proposal”, which would have valued the Aberdeen-based company’s equity at £1.23bn. The group said the board and its advisers “concluded that the cash component of 118p per FirstGroup share significantly undervalues FirstGroup’s continuing operations and its future prospects”. It added that the contingent right component “does not provide shareholders with sufficient certainty”. Shares in FirstGroup were flat at 136p after news of the rejection. The company, which is the main shareholder in four UK rail franchises, has endured a tough few years. Since 2019 it has battled a group of investors who ultimately ousted chief executive Matthew Gregory last year. The activists, led by New York-based Coast Capital Management, were disgruntled with the £3.3bn FirstGroup received for the sale of its operations in the US. Coast said FirstGroup’s management had bungled the deal to sell its FirstStudent and FirstTransit businesses to Swedish private equity group EQT by selling during the pandemic, substantially undervaluing the divisions. The deal was eventually approved by shareholders despite the activists’ objections. However, Coast said Gregory should be removed. David Martin was made executive chair until a permanent replacement was found. Coast sold its stake last year through a tender offer, removing itself as one of FirstGroup’s largest shareholders. Transport companies more broadly have struggled through the Covid-19 pandemic as the lockdown halted bus and rail traffic. Train and bus businesses have also been grappling with the energy crisis as the cost of fuel has rocketed, exacerbated by sanctions on Russia as a result of its invasion of Ukraine. FirstGroup’s UK rail franchises include Great Western Railway, South Western Railway, Transpennine Express and Avanti West Coast. The company also runs Hull Trains and Lumo. It is the second-biggest operator of regional buses, providing services in Glasgow, Bristol and Leeds.

 

[PaulMc7]

This has gone past a few people? First Group reject the offer:

FirstGroup rejects £1.23bn offer from private equity bidder

UK’s biggest train operator says proposal from I Squared Capital ‘significantly undervalues’ business

www.ft.com

It's a lot of money but I'm not surprised by it being rejected. When you add up the likes of staff, depots, fleet etc and that's just on buses alone it'll probably take a lot more for them to sell

 

[83G/84D]

First Bus finances latest:-

FirstGroup profits up as passenger numbers recover





Transport firm FirstGroup has reported a rise in profits amid cost reductions and a recovery in passenger numbers.

The bus and train operator's results came a week after the company rejected a £1.2bn takeover proposal from an American private equity firm.

Its adjusted operating profits rose to £226.8m for the year to 26 March, compared with £220.2m a year earlier.

The Aberdeen-based company said profit from continuing operations surpassed its expectations for the year.

Meanwhile, total revenues declined to £5.58bn, from £6.84bn a year earlier, due to disposals.

FirstGroup said revenues on continuing operations grew amid an increase in bus passenger numbers following pandemic disruption, while it also witnessed growth in rail.

FirstGroup said it expected to make progress over the current year, despite uncertainty in the economic backdrop.

It added that it would benefit from a further £5m in cost savings over the year.

'Delivered on commitments'​

Executive chairman David Martin said: "We have delivered on our commitments this year to refocus the business, de-risk the balance sheet and unlock value for shareholders.

"As a cash generative business with a strong balance sheet, FirstGroup is well placed to invest in the services our passengers want, to sustain our path to a zero-emission bus fleet, and to actively consider additional value creation opportunities to leverage our market leading public transport expertise."

Last week, the group turned down a takeover proposal, saying the 118p-a-share upfront cash part of an unsolicited approach from I Squared Capital "significantly undervalued FirstGroup's continuing operations and its future prospects".

FirstGroup profits up as passenger numbers recover - BBC News

 

[Goldfish62]

A pretty scathing opinion from Roger French on the forthcoming Firstbus reorg. I completely agree with him:

A reverse move for First

Saturday 2nd July 2022 First Bus has announced a major shake up of the management structure of its subsidiary companies which will cut costs particularly senior managers and overheads. It’s a…

busandtrainuser.com

First Bus has announced a major shake up of the management structure of its subsidiary companies which will cut costs particularly senior managers and overheads. It’s a laudable aim as Government Covid financial support comes to an end in a couple of months time and with passenger numbers still 80% of ‘normal’ expectations a raft of cuts to services is inevitable in the autumn.

But, oh dear, oh dear, if rampant inflation and industrial unrest are taking us back to the bad old days of the 1970s, First’s proposed reorganisation has all the hallmarks of recreating the disastrous period for the Group in the 1990s when management became ever more remote from operations on the ground due to completely unworkable mergers of the company’s operating areas along with centralised edicts and overbearing control.

And here we go again.

 

[Andyh82]

One management structure covering Penzance and Slough is ridiculous

Running Manchester from Leicester doesn’t exactly give off a view that they are wanting to be a big player in Andy Burnham’s new world

 

[SSmith2009]

Running Manchester from Leicester doesn’t exactly give off a view that they are wanting to be a big player in Andy Burnham’s new world

Manchester into the Midlands ops is odd surely tagging it onto Yorkshire would be easier

 

[Megafuss]

A pretty scathing opinion from Roger French on the forthcoming Firstbus reorg. I completely agree with him:

A reverse move for First

Saturday 2nd July 2022 First Bus has announced a major shake up of the management structure of its subsidiary companies which will cut costs particularly senior managers and overheads. It’s a…

busandtrainuser.com

I don't always agree with Roger, but he's bang on about local management teams. Relying on data alone to make decisions affecting somewhere hundreds of miles always is a recipe for disaster. I bet it looked good in whatever powerpoint presentation was presented to the First decision makers though....

 

[F Great Eastern]

Having spent god knows how many years fixing the problems caused by the last time they tried this, to see them literally make the same mistakes again with the same theories that proven not to work last time, is pretty staggering.

I did think when they appointed Janette Bell it was a strange appointment and sooner or later her lack of experience in the bus industry may well catch her out. Unfortunately it seems that already her lack of experience in the industry is plain for all to see, because anyone who was around the industry the last time First tried this would know what a disaster it was and what they are proposing to do now, could well undo a lot of the good work people have done.

Like Rodger, I agree that giving local management more power has allowed strong identities to be formed in areas which has allowed each operating company to innovate and given local managers the ability to tailor solutions to the needs of each area without the interference of centralised policies and tight control from people hundreds of miles away that have no idea about the local operations in the Towns and cities and know the theory of everything and have the experience of nothing.

I hope that I am proven wrong, but the decisions that are being made look like those of someone who knows the theory of everything and the practical knowledge of very little. The words that Bell comes out with in that blog are pretty staggering and they paint a picture of being fuelled by management consultant theory, which I guess is all you can turn to when you have no experience of the industry, you just go back to what you learnt in another industry or your own theories, because you don't have the experience yourself.

Also the fact they're consolidating 10 roles into 6 in terms of leadership, also means it's likely that some people may very well lose their jobs in this. They say they are consulting with leadership teams, but if there's going to be a reduction in management teams to that tune, then are you really going to speak out? At the end of the day, if you do, the chances of you getting one of those 6 are going to be slim I'd have thought. Also, it may allow the company to move people on whom otherwise they could not. I assume if people apply for the new roles and they are not successful, they will be made redundant?

I really hope to be proven wrong, but to me this seems like an instance where something was broken for so long, it took them an age to fix it and when they have fixed most of it, they're determined to break it again.

 

[Goldfish62]

One management structure covering Penzance and Slough is ridiculous

Running Manchester from Leicester doesn’t exactly give off a view that they are wanting to be a big player in Andy Burnham’s new world

Does Ms Bell not understand that the renaissance in certain local bus operations at the same time as more localised management was more than a coincidence?

As for Manchester, Stagecoach and GoAhead have long recognised that managing franchised operations benefits from being in a completely separate operational unit. That's why Stagecoach London is not part of UK Bus and that Metrobus's TfL operations were absorbed into GoAhead London.

 

[Tempest3K]

Joy, York's already a mess without pulling the small amount of local focus it gets. Guess I'd better get used to the car again, better sat in traffic with aircon and out of the rain than stranded at a bus stop waiting to see one of their wrecks turn up.

 

[overthewater]

It's like she looked at Scotland then decided that can work elsewhere. However, Aberdeen doesn't seem to have been badly affected by the set up. Surely some light at the end of the tunnel?

 

[DragonEast]

Just wondering, in a future world in which the busco is just a contractor for services specified and controlled by the local authority, does it matter? Is that what Ms. Bell is planning for?

 

[Mal]

Also the fact they're consolidating 10 roles into 6 in terms of leadership, also means it's likely that some people may very well lose their jobs in this. They say they are consulting with leadership teams, but if there's going to be a reduction in management teams to that tune, then are you really going to speak out? At the end of the day, if you do, the chances of you getting one of those 6 are going to be slim I'd have thought. Also, it may allow the company to move people on whom otherwise they could not. I assume if people apply for the new roles and they are not successful, they will be made redundant?

Many years ago when I worked in an office, the boss asked if I'd like to join the golf club but I said it was too expensive and I thought it a waste of time. About 3 months later, redundancies were announced and I was not too surprised when my name was included! Luckily enough, I was only out of work a few weeks before getting a better job.

 

[DunsBus]

The loud bang that I've just heard is that of First shooting itself in the foot.

 

[Jordan Adam]

It's like she looked at Scotland then decided that can work elsewhere. However, Aberdeen doesn't seem to have been badly affected by the set up. Surely some light at the end of the tunnel?

I would generally agree that it has worked in Scotland but that may be because since the company structure was revised 5 years ago the senior management has mostly been people that have notable experience with the operating area, i'm not sure if it would've worked had those positions been held by people who were joining from outside the company/area (as is often the case). That said i'm not convinced that having network planners/schedulers that aren't locally based works, we saw that with the continuous poor changes at Aberdeen a few years back when the network planner was someone based at Larbert...

 

[dodecahedron67]

Joy, York's already a mess without pulling the small amount of local focus it gets. Guess I'd better get used to the car again, better sat in traffic with aircon and out of the rain than stranded at a bus stop waiting to see one of their wrecks turn up.

I believe this won't actually mean much change for York. It just goes from being "twinned" with Oldham to being "twinned" with Leeds more, something which was already happening with where buses were being borrowed from. Previously they used to take them all the way over the M62 from Oldham whereas the past couple of times they've been taken from Leeds/Bradford/Halifax/Hudds

 

[TheGrandWazoo]

Having spent god knows how many years fixing the problems caused by the last time they tried this, to see them literally make the same mistakes again with the same theories that proven not to work last time, is pretty staggering.

I did think when they appointed Janette Bell it was a strange appointment and sooner or later her lack of experience in the bus industry may well catch her out. Unfortunately it seems that already her lack of experience in the industry is plain for all to see, because anyone who was around the industry the last time First tried this would know what a disaster it was and what they are proposing to do now, could well undo a lot of the good work people have done.

Like Rodger, I agree that giving local management more power has allowed strong identities to be formed in areas which has allowed each operating company to innovate and given local managers the ability to tailor solutions to the needs of each area without the interference of centralised policies and tight control from people hundreds of miles away that have no idea about the local operations in the Towns and cities and know the theory of everything and have the experience of nothing.

I hope that I am proven wrong, but the decisions that are being made look like those of someone who knows the theory of everything and the practical knowledge of very little. The words that Bell comes out with in that blog are pretty staggering and they paint a picture of being fuelled by management consultant theory, which I guess is all you can turn to when you have no experience of the industry, you just go back to what you learnt in another industry or your own theories, because you don't have the experience yourself.

Also the fact they're consolidating 10 roles into 6 in terms of leadership, also means it's likely that some people may very well lose their jobs in this. They say they are consulting with leadership teams, but if there's going to be a reduction in management teams to that tune, then are you really going to speak out? At the end of the day, if you do, the chances of you getting one of those 6 are going to be slim I'd have thought. Also, it may allow the company to move people on whom otherwise they could not. I assume if people apply for the new roles and they are not successful, they will be made redundant?

I really hope to be proven wrong, but to me this seems like an instance where something was broken for so long, it took them an age to fix it and when they have fixed most of it, they're determined to break it again.

I understand the concerns being raised but there's a few points that we should bear in mind.

First of all, there's the issue of not knowing the bus industry. That's true enough but remember that the previous s***show was presided over by a dyed in the wool busman in the shape of Moir Lockhead. When you're at the level that Janette Bell is at, the nuances of managing buses are less pronounced. The real skill, and where the concern should actually be, is being able to manage through your management teams.

Now, are those management teams now being spread too thin? That's the concern but more worrying will be if a) there is a consequent reduction in lower levels and b) if there's a change in management culture. First's problems weren't just about managers being spread to thin... they weren't allowed to make any decisions with everything coming from the centre. A return to that, as shown by Arriva and (to an extent) Stagecoach would be the most retrograde step they could make.

 

[superkev]

Thinking of the recent local area repaints perhaps the new boundaries will start another round of expensive repainting.
Or, even go back to a coporate livery - Sheffields definatly looks far the best to me.
K

 

[RELL6L]

One despairs on reading this. In any corporate reorganisation you can reckon on about a year being wasted by focus being distracted by jockeying for position in the new structure with no one senior paying enough attention to the business.

On the plus side, if it means local management can just get on with the job for a while, and is good enough, then you might get some progress. But only until interference returns from new managers who know even less than the old ones!

That’s my experience from working in larger companies at quite a senior level… let’s hope First will be different…

 

[Simon75]

My local First op (Potteries), Head office 60 miles in Leicester. Previously 180 miles in Chelmsford.
The Potteries ( like Leicester, Worcester , Slough and Aberdeen) are ' isolated ' from other First operations

 

[buslad1988]

Now that Badgerline, Bradford and Leeds have received their Streetdecks are there anymore due for other op companies? Of the group order placed for 80 I make 16 still unaccounted for/due.

Is anyone aware of any further upcoming cascades around the regions too?

 

[Goldfish62]

Now that Badgerline, Bradford and Leeds have received their Streetdecks are there anymore due for other op companies? Of the group order placed for 80 I make 16 still unaccounted for/due.

Is anyone aware of any further upcoming cascades around the regions too?

First South West have an order for four buses for "The Mousehole" route. No idea what they are, but they'll be very small!

 

[Volvodart]

Now that Badgerline, Bradford and Leeds have received their Streetdecks are there anymore due for other op companies? Of the group order placed for 80 I make 16 still unaccounted for/due.

Is anyone aware of any further upcoming cascades around the regions too?

Where is the order for 80 from? It is the first I have heard of it.

 

[dodecahedron67]

Now that Badgerline, Bradford and Leeds have received their Streetdecks are there anymore due for other op companies? Of the group order placed for 80 I make 16 still unaccounted for/due.

Is anyone aware of any further upcoming cascades around the regions too?

12 for york