Institutional investors Schroders and Columbia Threadneedle are to vote against the incumbent chairman of transport giant FirstGroup PLC (LON:FGP) at an emergency general meeting on Tuesday, providing a boost to activist investor Coast Capital’s efforts to radically overhaul the firm.
According to Sky News, Schroders and Columbia, which own around 9% and 10% of the FTSE 250 group respectively, will oppose the re-election of Wolfhart Hauser at the EGM, which in combination with Coast’s stake represents around 30% of the share capital.
A spokesman for Columbia also told Proactive that the company had voted against the chairman and two of FirstGroup's "longest-serving board directors", which they said would "better realise value for shareholders".
While Columbia was not specific about the other directors it had voted against, if Hauser is ousted it could force other members of the board, including chief executive Matthew Gregory, into an untenable position even if they survive Tuesday’s vote.
New York-based Coast has been agitating for a radical overhaul of the company’s operations for some time, having previously lambasted the incumbent management for having presided over a period of value destruction at the firm, particularly its running of UK rail franchises, which Coast has described as “an enormous black hole of capital”.
The hostility to FirstGroup’s activities in the rail industry was brought into sharp relief over the weekend when it emerged that the company could be in line to take over the West Coast rail franchise if it managed to see off the boardroom coup on Tuesday.
Coast is seeking the removal of six of FirstGroup’s 11 directors, including Hauser, and plans to replace them with its own nominees, such as former Tory transport minister Steve Norris as chairman.
At the end of May, FirstGroup appeared to have bowed to pressure from the activist investor by announcing plans to sell off its Greyhound US bus business as part of a “rationalisation” of its portfolio, however the strategy did little to assuage Coast’s frustration, with partner Chad Tappendorf saying the plans were “half baked”.
Since unveiling its strategy update, FirstGroup has seen its shares drop 14%, which Coast leapt upon as demonstrating “a growing erosion of investor confidence in a FGP management team that is well past its sell-by date”.
However, FirstGroup responded aggressively, saying Coast was aiming to “seize control of a UK plc without paying a premium” and that its plans for the company, which included a withdrawal from the UK rail sector, were “not in the best interests of all shareholders and would leave the company with higher debt”.
Schroders declined to comment.
In early afternoon trading on Monday, FirstGroup shares were 0.8% higher at 99.4p.
--Adds comment form Columbia Threadneedle and updates share price--