Train and bus operator FirstGroup has completed the sale of two US divisions for £3.3 billion, the company has announced.
Bosses offloaded the First Student and First Transit businesses to EQT Infrastructure more than a year after first announcing plans to quit North America following pressure from activist investors.
First Student operates around 43,000 highly-distinctive school buses in the US, while First Transit runs local bus and transport services.
The cash raised from the deal will be used to pay down debts, including £300 million borrowed from the UK Government as part of Covid-19 support loans.
Around £336 million will be added to the UK Bus and Group pension schemes and £365 million will be handed over to shareholders in a dividend later this year, the company added.
Plans to sell FirstGroup’s Greyhound coach business in the US continue and bosses hope to hand out more cash as suitors are tapped up.
Chief executive Matthew Gregory said: “Going forward, FirstGroup will be a more focused, resilient business that is in a strong position to deliver for bus and rail passengers in the UK, continue investing in its zero-emissions fleet strategy, and play a key role in meeting society’s broader ESG goals.”
The sale of the two divisions comes a year after activist investor Coast Capital – the company’s largest shareholder – attempted to stage a boardroom coup.
According to filings, Coast has a 13.8% stake in FirstGroup and wanted the business to sell off its North American division after failing in its attempts to replace several board members.
FirstGroup, which operates Great Western Railway, South Western Railway, TransPennine Express and Avanti West Coast, said in December 2019 that a formal sale of its US businesses was under way.
The sale will now be formally put to a vote by shareholders.