John Menzies, the aviation services provider, has confirmed that it had received a preliminary and unsolicited proposal from National Aviation Services (NAS), a subsidiary of Agility Public Warehousing (Agility), to acquire the entire, and to be issued share capital, of Menzies at a price of 510 pence per Menzies share in cash. The proposal follows an earlier unsolicited approach from NAS to the Board regarding a possible all cash offer at 460 pence per Menzies share.
Menzies has confirmed that following careful consideration of the proposal with financial advisers, Goldman Sachs, it has unanimously rejected the offer, concluded it is “entirely opportunistic, conditional and that the terms fundamentally undervalue Menzies and its future prospects”.
Menzies adds that the offers comes at a time when the full impact of management actions has not yet been reflected in its valuation and when underlying volumes have yet to return to pre-pandemic levels. “Since 2019 the business has been re-shaped with £25 million of permanent cost removed, a clear and deliverable strategy implemented and a refocussed commercial approach that has generated £120 million of net new annualised revenue. The Proposal does not reflect the benefit of these actions”, the company said in a statement.
Menzies adds that it has strong growth prospects and an attractive industry outlook, which will benefit from the continued recovery in flight and freight volumes.
“We have a clear strategy with tangible evidence of delivery. We will continue to deliver against our five strategic priorities - focussing on air cargo services, new fuelling operations and high quality ground handling with new operations being targeted in emerging markets where margins are typically higher. Our pipeline of opportunities is full. In 2022 we have clear and attainable commercial opportunities that we believe will generate approximately £80 million of net new annualised revenue and several business development opportunities that will deliver approximately £150-200 million of new revenue over the short to medium term - all of which are expected to be at higher margins.”
“The Board of Menzies has unanimously rejected this unsolicited and highly opportunistic Proposal, which we believe does not reflect Menzies’ true intrinsic business worth or its prospects,” said Philipp Joeinig, Chairman and CEO of John Menzies. “Menzies continues to make good progress with strong performance across a number of service lines, which together with productivity gains, saw the Group to finish last year strongly. This strong performance and momentum in 2021 has continued in 2022 with further contract wins and renewals alongside the continued recovery of global flight volumes.
The Board remains fully confident in the recovery and outlook for the global aviation services industry as it returns to pre-pandemic trading levels and benefits from long term structural growth drivers. The Board believes the strong portfolio mix, positioning of Menzies and the ongoing execution of Menzies’ strategy will create significant value for shareholders in the near and medium term.”