Menzies ‘willing to recommend’ £559m Kuwait bid

The board of Edinburgh-based aviation logistics giant John Menzies plc said on Monday it “would be willing unanimously to recommend” a final cash takeover offer of £6.08 per share worth roughly £559 million from Kuwait-based airport services firm National Aviation Services (NAS).

“Accordingly, the board is in discussions with NAS in relation to these terms and will be providing NAS with access to management and due diligence information …” said Menzies.

“There can be no certainty that any offer will be made.” 

Menzies shares were trading around £2.90 on February 2, the date on which NAS made its second takeover proposal to the Menzies board.

NAS must announce a firm intention to make an offer for Menzies by March 9.

NAS is unit of Kuwait-based Agility Public Warehousing Co.

Last Friday, NAS said that Agility Strategies Holding Limited (ASHL), “an entity under common control with and acting in concert with NAS” had “entered into contracts to purchase, in aggregate, 17,433,893 ordinary shares in Menzies, representing approximately 19.0% of the issued share capital of Menzies” for £6.05 per share.

In a stock exchange statement on Monday, Menzies said: “The board of Menzies announces that it has received a further revised proposal from NAS, a subsidiary of Agility, regarding a possible all cash offer for Menzies of 608 pence per share.

“The final proposal is conditional on, amongst other things, confirmatory due diligence and the recommendation of the board of Menzies (such conditions being capable of waiver by NAS).

The final proposal follows earlier approaches from NAS to the board regarding possible all cash offers for Menzies at 460 pence, 510 pence and 605 pence per Menzies share.

The board has considered the final proposal and indicated to NAS that it would be willing unanimously to recommend an offer at the financial terms of the final proposal to Menzies shareholders subject to the satisfactory resolution of all the other terms of the offer, including the approach to the customary regulatory approvals required to complete any transaction.

“Accordingly, the board is in discussions with NAS in relation to these terms and will be providing NAS with access to management and due diligence information.”

Menzies 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.”

Menzies added: “There can be no certainty that any offer will be made.”

AJ Bell Investment Director Russ Mould wrote: “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.”