Menzies defends strategy against ‘low value’ offer
Menzies’ board has defended its strategy against a proposed 510p per share offer from NAS Holding.
It said it noted a statement by the Kuwait-based business yesterday calling for access to its books but insists the proposed offer, valuing Menzies at £468m, is “opportunistic, conditional and that the terms fundamentally undervalue Menzies and its future prospects.”
In a statement it said that when adjusted for permanent cost savings of £25 million that the management team of Menzies has already delivered, the NAS proposal implies an EV/EBITDA multiple of 6.4x.
This is “significantly lower than achieved in comparable transactions over the last decade in our sector for other assets of Menzies’ size and standing”, it says.
In addition, it says the NAS proposal fails to take account of the execution of Menzies’ strategy and the significant potential value creation driven by management actions not yet reflected in Menzies’ valuation and the return of underlying volumes to pre-pandemic levels.
It says offer also ignores a pipeline of higher margin opportunities that it believes will generate approximately £80m of net new annualised revenue from commercial opportunities and approximately £150-200m of new revenue over the short to medium term from several business development opportunities.
Menzies’ board and management team were accused yesterday of refusing to engage with its suitor whose two offers for the Edinburgh logistics business have been rejected by the board.
The Kuwait-based pursuer said in an update yesterday that the airport luggage handler had chosen not to share any information to corroborate their differing views on the company and industry, and therefore its valuation.
NAS said it “sees no reason to change its view on valuation and continues to view its improved possible cash offer of 510 pence per share as a full and fair price relative to the information Menzies has provided to the market on its current business and prospects.”