Edinburgh aviation services giant Menzies rejects 'highly opportunistic' takeover bid

Menzies, the Edinburgh-headquartered aviation services group, saw its shares leap after revealing it had rejected a £469 million takeover approach from a Kuwaiti suitor.

Shares in the firm, which provides fuelling, ground handling, lounge and maintenance services at more than 200 airports in 37 countries, jumped more than a third in morning trade after it said it had rebuffed a 510p-a-share unsolicited bid proposal from National Aviation Services (NAS).

The bidder is an aviation services provider in emerging markets, which has its headquarters in Kuwait and is part of the wider Agility Public Warehousing Co.

The proposal followed an earlier 460p-a-share possible offer previously made by NAS.

Menzies Aviation operates at more than 200 airports in some 37 countries, supported by a team of 25,000 people.

Menzies noted: “The proposal is highly opportunistic and 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.”

The firm said it “carefully considered” the proposal with its financial adviser, Goldman Sachs, but it was unanimously rejected, as the terms “fundamentally undervalue Menzies and its future prospects”.

Chairman and chief executive Philipp Joeinig 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.

“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 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.”

John Menzies started out in 1833 when its eponymous founder opened a bookshop at 61 Princes Street, Edinburgh which was to become the only wholesale bookseller north of the Border. The newspaper and magazine distribution business was spun out in 2018, creating Menzies Distribution, and leaving the rest of the firm to focus on providing aviation services.

Menzies Aviation is due to announce its results for 2021 on March 8.

Last month, the group reported a solid performance in recent months despite the travel sector being battered by the pandemic.

Issuing a trading update ahead of March’s full-year results, the firm said overall trading through the latter part of the fourth quarter had been in line with the board’s expectations.

Menzies told investors: “Despite the impact of changing travel restrictions related to the Omicron variant, the business saw strong performances from a number of services lines which, together with continued productivity gains, saw the group finish the year strongly.

“Cash generation has also remained positive, with the group retaining a strong liquidity position and year end net debt in line with expectations.”

Bosses also highlighted an “excellent” commercial performance with further contract wins and renewals.

The group also said it would be changing its reporting currency to US dollars from pounds, noting that the percentage of its services that are provided in the UK has reduced significantly and now accounts for just 11 per cent of overall revenues. As a result, next month’s financial results will be presented in dollars.

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