The board of Edinburgh-based airport logistics giant John Menzies said on Wednesday it will recommend that shareholders accept a £571 million cash takeover offer from Kuwait-based National Aviation Services (NAS), a subsidiary of Agility Public Warehousing Company.
The offer of £6.08 per share represents a premium of 81% to the Menzies closing share price of £3.35 on February 8, 2022, the last business day prior to the offer period.
Agility has already acquired about 19% of Menzies shares, making it the largest shareholder in one of Scotland’s oldest and biggest companies.
Agility has also received irrevocable undertakings in favor of the deal from Menzies shareholders representing 14.29% of the firm’s stock.
Those shareholders include directors, D.C. Thomson & Company Limited, Axxion S.A., WM Thomson & Sons and SVM Asset Management.
The deal must be approved by at least 75% “in value of the scheme shareholders entitled to vote and present and voting, either in person or by proxy, at the court meeting” and must also be approved by Menzies shareholders at a general meeting.
Agility intends to put in place “incentivisation and retention arrangements” for “selected members of the Menzies senior management team.”
Agility said that “in the event that any headcount reductions take place, the combined group will observe the existing contractual and statutory employment rights, including pension rights, of Menzies employees.”
Menzies chairman and CEO Philipp Joeinig said: “The Menzies directors believe that the offer represents a fair and recommendable price for shareholders which recognises Menzies’ future prospects.
“Menzies is an outstanding business with a long and rich history.
“The board of Menzies applauds the work that the Menzies management team have done to steer the business through the challenging impacts of the pandemic and position the business for continued future growth and the next evolution in its journey.
“The Menzies all-cash offer from Bidco represents an opportunity for current shareholders to realise value for their investment at an attractive premium and valuation multiple.”
The companies said the offer values Menzies at £763 million on an “enterprise value basis.”
Menzies provides airport logistics services at more than 200 locations in more than 37 countries with a team of more than 25,000 employees.
The combined revenues of Menzies and NAS were in excess of $1.5 billion in 2021.
The combined group is expected to have 35,000 employees with a presence at more than 250 airports in 57 countries, handling more than 600,000 aircraft turns a year.
It is intended the combined group will be managed by a team drawn from both Menzies and NAS with the current chief executive officer, chief financial officer and chief operating officer of Menzies retaining these roles in the combined group.
The current NAS CEO is expected to assume the role of chair of the combined group.
NAS CEO Hassan El-Houry said: “This deal creates a world leader in airport services and unlocks value for all stakeholders.
“The NAS-Menzies combination brings together highly complementary operations and ensures that the combined business has the scale and resources to grow.
“Menzies shareholders will realize a premium in return for supporting the transaction.
“Customers will benefit from Menzies’ operational excellence at more airports around the world and will be able to choose from a broader product offering.
“Employees of both companies will benefit from being part of a larger, stronger group that offers more career development and advancement opportunities.
“The combined business will have the capital to invest in the talent, technology, innovation, infrastructure, equipment, and sustainability leadership required to accelerate growth.”
Agility vice-chairman Tarek Sultan said: “Agility’s focus is on growth and shareholder value creation.
“We are a long-term, multi-business operator and investor aiming to create value with a disciplined investment strategy that focuses on companies in high-growth sectors with strong fundamentals, reinforced by management teams with established records, best-practices governance, and alignment with Agility’s vision and values.
“Menzies is a good fit.
“The aviation sector has strong growth potential, and Menzies is one of the most-established providers in the industry, with a sustainability focus we share.
“A NAS-Menzies combination will create a strong and resilient industry player, well positioned to grow and drive future earnings.
“We expect this acquisition to further diversify Agility’s revenue base and strengthen cash flow generation.”