John Menzies plc (“Menzies” or the “Group”)
Rejection of Unsolicited and Highly Opportunistic Approach
Significant future value creation potential for menzies shareholders
The Board of John Menzies (the “Board”) announces that it has received a preliminary and unsolicited proposal from National Aviation Services Holding for Company's Business Management (Holdco) S.P.C. (“NAS”), a subsidiary of Agility Public Warehousing Co. K.S.C. (“Agility”), to acquire the entire and to be issued share capital of Menzies at a price of 510 pence per Menzies share in cash (the “Proposal”).
The Proposal follows an earlier unsolicited approach from NAS to the Board regarding a possible all cash offer at 460 pence per Menzies share.
The Board has carefully considered the Proposal together with its financial advisers, Goldman Sachs International, and has unanimously rejected it, having concluded that the Proposal is entirely opportunistic, conditional and that the terms fundamentally undervalue Menzies and its future prospects.
The Board is committed to continuing the execution of its strategy and believes that:
- 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;
- Since 2019 the business has been re-shaped with £25 million of permanent cost removed, a clear and deliverable strategy implemented and a refocussed commercial approach that has generated £120 million of net new annualised revenue. The Proposal does not reflect the benefit of these actions;
- The Proposal fails to reflect Menzies strong growth prospects and attractive industry outlook. 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 have a clear strategy with tangible evidence of delivery. 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;
- Our pipeline of opportunities is full. In 2022 we have clear and attainable commercial opportunities that we believe will generate approximately £80 million of net new annualised revenue and several business development opportunities that will deliver approximately £150-200 million of new revenue over the short to medium term- all of which are expected to be at higher margins;
- The Proposal implies a significantly lower (pre-IFRS16) EV/EBITDA multiple than achieved in comparable transactions over the last decade in our sector for other assets of our size and standing; and
- The Proposal fails to account for our highly experienced management team, who are all invested in the business and bring a proven track record.
Following a challenging period as Menzies navigated the impact of the pandemic, the Board believes that Menzies is now well positioned for the significant opportunities ahead as the aviation industry continues to recover, the Group benefits from the decisive management actions taken over the last two years, and Menzies is able to capitalise on a broad range of commercial, investment and growth opportunities that will be available to the Group.
Menzies has now been rebuilt for the future and the Board expects to deliver strong revenue growth in the short and medium term generating significant value creation on a standalone basis. The Proposal is opportunistic and does not fully provide shareholders with the full value potential available in Menzies.
Philipp Joeinig, Chairman and CEO of John Menzies plc, said:
“The Board of Menzies has unanimously rejected this unsolicited and highly opportunistic Proposal, which we believe does not reflect Menzies' true intrinsic business worth or its prospects.
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 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. 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.”
Menzies will announce its results for the financial year ended 31 December 2021 on 8 March 2022.