The media announced recently that First Group, the 250 listed FTSE transport giant have recently been targeted by one of the world’s biggest hedge funds. the American owned Company Apollo had made an offer for the group. Which saw an immediate rise in the share value, although the main board rejected the offer describing it as opportunistic with the price offered clearly not reflecting the true value of the Company, in their opinion.
Apollo is a firm which has built its success on managing private equity, with credit and assets worth around $249 billion which is a lot of money, it has focused on communication and infrastructure networks and owns a gaming Company. It now has until May 9th to make a formal bid for the group, so we will have to wait and see what happens. Interestingly when I googled Apollo, it advised me that the Greek God was associated with music, poetry, art, oracles, archery, medicine, sun, light, knowledge and plague. Be interesting to see which if any of these fates might befall First Group if Apollo gets its hands on it.
This is not the first time that FirstGroup has attracted the attention of aggressive investors, who would prefer to own the Company and then sell off its component parts. A couple of years ago an attempt was made at the annual AGM to revolt and sell. Personally as one of the original members of First Group (which was formed in 1995, and as a shareholder for many years as well as an employee for 20 years). I am personally pleased that the board has remained strong and true to its beliefs. I have watched this Company grow from an acorn into a mighty oak tree, today employing over 100,000 people and turning over 7 billion quid a year.
It is true that First has been facing some real challenges over the last few years, but it is I believe about to turn a corner. We at uTrack work with First across the UK and North America and we have witnessed a long but steady process of improvement. The UK bus division under the leadership of the excellent Giles Fearnley is now seeing real passenger growth in key areas like Bristol, Leicester, Manchester and West Yorkshire. The Student market in the USA is a huge undertaking transporting over 6 and a half million school children across North America. The iconic Greyhound Bus, such a pillar of the traveller across the USA in the nineteen fifties and sixties has recently been hit hard by the rise in cheaper long haul air services across the USA.
The rail division has seen an uplift in passenger numbers and revenues and is looking solid. So, overall after being in the doldrums since 2013, with shareholders not receiving any dividend at all, maybe it is fair that investors keep the faith with the board and allow the recovery to take place. And knowing what I know about the potential of modern day technology to impact on the various businesses within the First group portfolio I envisage better days ahead.