End of independence

Menzies board to recommend £558m takeover offer

Menzies Aviation
Menzies will surrender its long-held independence

Aviation logistics company Menzies looks certain to surrender its long-held independence after the board of the Edinburgh company said it would unanimously recommend a new all-cash proposal from its Kuwaiti suitor.

The final revised proposal from NAS of 608p values the Edinburgh firm at about £558m and follows earlier rejected approaches at 460p, 510p and 605p.

The board is in discussions with NAS in relation to these terms and will be providing its suitor with access to management and due diligence information.

In a statement this morning, the Menzies board said: “NAS has confirmed to the board that the financial terms of the final proposal are final and will not be increased, except that NAS reserves the right to increase the amount of the offer price if there is an announcement on or after the date of this announcement of a firm offer for Menzies by a third party offeror.”

It said there can be no certainty that any offer will be made and that the statement was made by Menzies with the consent of NAS.

John Menzies, one of Scotland’s oldest and largest companies, was established in 1833 as a book seller on Edinburgh’s Princes Street and is still headquartered in the city.

It sold its newspaper distribution services and moved into aviation services, now operating at more than 200 airports in 37 countries, supported by a global team of 25,000.

In 2020 the company handled 0.5 million aircraft turns, 1.2 million tonnes of cargo and fuelled 1.9 million turnarounds.

NAS argued that a combination with Menzies would create a group with a wider geographic scale, complementary products and a strong customer base in a changing aviation sector facing some continuing pressures.

Shares in Menzies were at 290p when it made its second offer of 510p per share earlier this month. This morning the shares were trading at 586p.

Under the takeover code NAS has until 5pm on 9 March to make a firm offer or walk away.

Market reaction

Russ Mould, investment director at AJ Bell, says: “It’s been four years since John Menzies sold its newspaper distribution arm to fully focus on aviation services including cargo handling. Life hasn’t been easy in recent years and pandemic disruption left the share price trading on depressed levels which attracted an opportunistic takeover bid.

“The offer has since been increased several times and NAS has now tabled its final offer of 608p per share which puts the stock price at levels last seen in August 2018 and more than double the level before bid interest was first disclosed in early February.

“With the UK market still trading on a cheaper level relative to other places like the US, we’re likely to see further takeover action. That may be good for investors in that it provides a short-term boost to the value of their assets, but longer-term this isn’t necessarily good for someone’s wealth or indeed the reputation of the market if the pool of companies is shrinking.

“A decent business should generate attractive returns for investors over a long period so giving it up just for a quick 20% to 40% bid premium isn’t always a wise move for someone with a long-term investment horizon.”

… more follows

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