The Edinburgh-based baggage handler and newspaper said the “transformational” acquisition of the business, from current owner BBA Aviation, would add plane fuelling to its aviation arm’s range of services and double the size of its operations in North America.
ASIG, headquartered in Florida, employs about 8,000 people and is one of the world’s largest independent providers of commercial airline services in the world. It has operations in 88 locations across seven countries, including the UK, and generated revenues of $415.8m in 2015.
Menzies chairman Dermot Smurfit said: “This is a transformational deal for Menzies and will significantly increase Menzies Aviation’s footprint globally while also adding fuelling to our operations.
“The transaction will create one of the largest aviation services businesses in the world, doubling the size of our North American operations, while strengthening Menzies Aviation’s service offering at major international gateways such as London Heathrow, San Francisco, Denver and Los Angeles.”
He added: “The board is confident of realising significant cost synergies following the acquisition and it is expected to deliver material enhancement in underlying earnings per share in its first full financial year of ownership.”
Menzies said the acquisition will be funded through a mixture of debt and a fully underwritten rights issue at a price of 343p a share, which will raise about £75.2m.
The ASIG deal comes as Menzies is considering a possible break-up to create separate distribution and aviation arms amid pressure from investors.
“The situation is complex, particularly with regard to the group’s pension schemes,” Menzies said today.
“The board has already engaged with specialist advisers and the pension trustees to progress with the structuring of the pension scheme in such a way as to give the board the maximum amount of flexibility in the future. The board expects this work to take up to 12 months and it will update Shareholders when appropriate.”
Subject to shareholder approval, the takeover is expected to complete by the end of this year.
BBA Aviation chief executive Simon Pryce said: “As part of our continuing emphasis on delivering long-term, sustainable value for shareholders, after receiving a number of approaches and going through a detailed process, we are pleased to announce the sale of ASIG to Menzies to create a focused and larger, broad based global supplier of commercial aviation services.
“This disposal further enhances BBA Aviation’s focus as a high-quality, strongly cash-generative market leader in the provision of business and general aviation and legacy support services.”