The board of John Menzies has received a "preliminary and unsolicited proposal" from National Aviation Services (NAS) Holding to acquire the entire share capital of the company at a price of 510 pence per share in cash, or around £468m.
The proposal follows an earlier unsolicited approach from NAS regarding a possible all cash offer at 460 pence per Menzies share. Menzies shares closed last night at 334p, valuing the company at £308m.
A statement explained that while the board has "carefully considered" the proposal with its financial advisers Goldman Sachs, it was unanimously rejected, as the terms "fundamentally undervalue" Menzies and its future prospects.
NAS - part of the Agility Public Warehousing group - is headquartered in Kuwait, and operates at 55 airports through emerging markets countries across Africa, Asia and the Middle East.
Its bid also comes at a time when the full impact of management actions is not yet reflected in Menzies valuation and underlying volumes have yet to return to pre-pandemic levels, according to a statement.
Since 2019 the business has been re-shaped, with £25m of permanent cost removed, a clear strategy implemented and a refocussed commercial approach that has generated £120m of net new annualised revenue.
The board also argued that Menzies is well positioned as a global player in a market with proven structural growth and will benefit from the continued recovery in flight and freight volumes.
"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," read the stock exchange update.
"We have clear and attainable commercial opportunities that we believe will generate approximately £80m of net new annualised revenue and several business development opportunities that will deliver approximately £150m to £200m of new revenue over the short to medium term - all of which are expected to be at higher margins."
The proposal also implies a significantly lower earnings multiple than achieved in comparable transactions over the last decade in the sector.
Philipp Joeinig, chairman and chief executive of John Menzies, said: “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.
“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.”
Menzies will announce its results for the last financial year on 8 March.
The statement added that there can be no certainty that any firm offer for Menzies will be made, nor as to the terms on which any offer may be made. A further announcement will be made in due course.
Menzies is one of Scotland's oldest and largest companies, established in 1833 as a book seller on Edinburgh’s Princes Street, and still headquartered in the city. Today the company is an international aviation services business, with operations worldwide.
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