SHARES in FirstGroup leapt more than six per cent after it belatedly agreed to a key demand from an activist investor which led an unsuccessful campaign to oust the board earlier this year.

Investors reacted positively after the Aberdeen-based bus and rail giant announced the appointment of former Arriva boss David Martin as chairman, with immediate effect. He replaces Wolfhart Hauser, who stepped down last month after sustained pressure from activist investor Coast Capital, the company’s biggest shareholder with a 10.01% stake.

Mr Martin, who led Arriva between 2006 and 2016, had been among an initial tranche of nominees whom US-based Coast said should be given positions on the board at the company. Coast claimed the board, under chief executive Matthew Gregory and Mr Hauser, had “presided over a “track record of value destruction and under-performance”.

READ MORE: FirstGroup sees off investor revolt, but chairman Wolfhart Hauser to go

The investor ultimately saw shareholders block its proposals to replace six of the 11 board members and replace them with seven nominees at a general meeting on June 25. However, by that stage Mr Martin was not among the nominees because he had not confirmed his willingness to be appointed as a director.

Mr Hauser signalled after the meeting that he would not seek re-election at FirstGroup’s annual meeting on July 25, after nearly 30 per cent of voted shares supporting Coast’s resolution calling for him to be removed as a director. Jim Winestock and Imelda Welsh have since announced their intentions to step down from the board.

READ MORE: US bid to oust board at Scots bus and rail giant

Coast welcomed the decision by FirstGroup to appoint Mr Martin as chairman, describing it as the “beginning of a new and productive chapter in the company’s history.”

But it said there is still “much more to be done”.

On Wednesday, FirstGroup and Trenitalia won the right to take over the West Coast rail franchise connecting Glasgow with London.

Shares closed up 7.3p at 121.9p.