FirstGroup PLC (LON:FGP ) is facing legal action from its largest shareholder over the sales of its US Transit and Student bus operations.
Coast Capital, which owns a 13.6% stake in the UK transport group, last week slammed the £3.3bn sale of First Transit and First Student to Swedish investment firm EQT.
Now it has ratcheted up its opposition further and called for a renegotiation of the deal otherwise it will go to court.
Describing the sales as a “destructive disposal”, Coast wants this Thursday’s shareholder vote to be delayed to allow for an independent valuation.
Schroders, FirstGroup’s second-largest shareholder with a 12% stake, has also said it intends to vote against the deal while reports at the weekend suggested small investors too were lining up against the sale.
Glass Lewis, which advises institutions how to vote on certain issues, meanwhile has recommended a vote against on the basis of “poor transaction timing and inadequate valuation”.
Three other proxy agencies have advised approving the deal, however, as has Columbia Threadneedle, which has a 10% stake.
The sale needs 50% shareholder support to be approved.
The disposal of First Transit and First Student would leave FirstGroup just with its Greyhound bus business in the US, but that too is up for sale.
The plan going forward is to refocus its operations on its UK bus and rail business that includes Great Western Railway.
James Rasteh, a founding partner at Coast, described the sale s a terrible deal.
“They were working to sell the most important public transport company in North America during a pandemic when there was no vaccine and no visibility on school reopenings.”
Coast said if it cannot get the meeting on Thursday adjourned and the sale is approved it will consider suing to recover any undervaluation losses.
FirstGroup has rejected Coast’s claims, saying last week that through the sale process the businesses were widely marketed with engagement with more than 40 potential buyers.
The group also denied it was holding an emergency board meeting on Monday to review the situation.