THE war of words between FirstGroup and the activist bidding to oust its board has escalated, with the US investor slamming claims by the bus and rail giant that it is pursuing the right strategy for the business.

FirstGroup unveiled radical plans last month to shake-up the Aberdeen-based company, which would see it hive off its bus operation and scale back its involvement in bidding for rail franchises in the UK.

The strategy also involves selling off its Greyhound inter-city coach business in the US, leading it to focus its long-term future around its First Student and First Transit operations across the Atlantic.

READ MORE: Bus and rail giant hits back at activist investor

The company denied the strategy was a direct response to Coast, which is seeking shareholder support to place seven of its own nominees on the board and remove six of the 11 directors, amid claims of poor performance and value destruction by the current regime.

Coast had written to shareholders arguing that FirstGroup would create “immense value for investors” by splitting its US and UK assets, while also claiming the current board does not have the necessary transport expertise to revive the company’s fortunes.

That stance was dismissed by FirstGroup chief executive Matthew Gregory as “inconsistent, ill-thought-out and riddled with errors” when he presented his new strategy last month.

READ MORE: FirstGroup plan fails to impress rebel shareholder

Now the investor has returned to the fray with a renewed attack on the board.

In a lengthy statement issued yesterday, the activist hit back at the new strategy being pursued by the FirstGroup board while defending the experience of its nominees.

James Rasteh, chief investment officer at Coast, declared that the share price of FirstGroup has “nose-dived by over 25 per cent” under the current regime and has fallen further since its new strategy was unveiled at the end of last month.

He said: “Since FGP (FirstGroup PLC) announced its new strategy on 30 May, the share price is down 15% whilst the sector is up over 5%. This demonstrates a growing erosion of investor confidence in a FGP management team that is well past its sell-by date.”

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Among other areas of contention, Coast hit back at what it said were claims by FirstGroup that the investor is seeking to take control of the board through the use of non-executive directors. It responded to concerns raised by FirstGroup about a “lack of recent experience and the past company involvement” of some of the directors proposed by Coast.

Following a requisition notice ultimately received from Coast, FirstGroup will hold a general meeting in London on June 25. Shareholders will be asked whether to vote remove six of the current 11 directors, including the chairman, Wolfhart Hauser, and chief executive, and replace them with seven Coast nominees. The Coast nominees include former UK Transport Minister Steve Norris and David Martin, ex-chief executive of bus giant Arriva.

Coast said yesterday: “To clarify, Coast is seeking only the removal of those members of the board who have clearly demonstrated their lack of fitness for office.”

The investor added: “Any business would be lucky to be able to call on the services of even one of these candidates.”

A spokesman for FirstGroup said Coast’s latest comments had not altered its position. Branding Coast’s strategy as “inconsistent and irresponsible”, he said the investor’s plans would leave the group with higher debt because they would involve the sale and leaseback of assets.

The FirstGroup spokesman said: “Their documents continue to demonstrate numerous factual inaccuracies and misunderstandings about FirstGroup and our markets, despite the many detailed and clear explanations we have provided them.

“We have set out our strategy, which is based on facts and knowledge of the business. We are delivering that, at pace, with a diverse and independent board who have the skills and backgrounds to address the future needs of transport.”

Shares in FirstGroup closed down 1.05p, or 1.05%, at 98.55p.