THE Kuwaiti suitor for Scottish aviation services business John Menzies has further ramped up the pressure on the Edinburgh firm by buying enough shares to become its largest shareholder.
National Aviation Services, so far spurned by the London-listed business, is purchasing a more than 13per cent stake at 605p-per-share, at around £73 million.
The move sent shares in Menzies up by 26% in early trading. The share purchase was double the value of Menzies’ shares at the start of the takeover manoeuvre.
Menzies said it has yet to receive a further proposal from NAS.
NAS said in a statement to the London Stock Exchange that the purchase demonstrates its seriousness and comes after an earlier possible offer of 510p valuing the firm at £469m was unanimously rejected by the Menzies board.
NAS also said it had again requested information access and dialogue with Menzies, and that it “looked forward to engaging with Menzies’ shareholders in parallel”.
Edinburgh-based Menzies said the offer is “opportunistic” and that the terms “fundamentally undervalue Menzies and its future prospects”.
NAS, which has over 6,000 staff and operates in 55 airports across the Middle East, Africa and South Asia, said it “continues to believe that the combination of the two businesses has a strong strategic and financial rationale”.
It added: “Menzies and NAS share highly complementary geographical footprints and product portfolios, with minimal overlap. NAS places importance on Menzies’ Scottish heritage, its enviable brand, and its long-standing operational excellence across the globe.
“A combination with NAS would bring greater geographical diversification to Menzies, forging deeper relationships with the combined customer base.”
NAS said following discussions with a number of Menzies’ shareholders that Agility Strategies Holding Limited, under common control with and acting in concert with NAS, had entered into contracts to purchase 12.1 million ordinary shares in Menzies, representing the 13.2% of the issued share capital.
Consequently, any firm offer for Menzies, if made, will be at a price of not less than 605p-per-share, because of British regulatory requirements.
Hassan El-Houry, NAS chief executive, said: “The acquisition of this significant stake demonstrates our seriousness and belief that a combination of Menzies and NAS offers a compelling opportunity to all stakeholders.
“If we were to make an offer at 605p-per-share, it would represent a premium of 109% to Menzies’ share price just over two weeks ago.
“Once again we urge the Menzies board to engage with us so that we can put our compelling and deliverable offer to shareholders and secure Menzies’ future in a highly uncertain environment.”
READ MORE: John Menzies engages with shareholders amid takeover bid
Menzies said in a statement: “The board has not received a further proposal from NAS.
“The board is confident in the execution of Menzies’ strategy and the significant potential value creation that this strategy will deliver in the near and medium term through the full impact of management actions, the return of underlying volumes to pre-pandemic levels and its pipeline of higher margin opportunities.
“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.
“The board will consider the best interests of Menzies’ shareholders and all actions to maximise shareholder value.”
Menzies, which began its business in 1833 as a bookseller, has 27,000 staff – against a pre-pandemic level of 30,000 – and operates in 200 airports in 34 countries, has recently hailed contract wins with Aeromexico, American Airlines, Delta Airlines, Wingo and Air Transat.
Menzies added: “There can be no certainty that any firm offer for Menzies will be made nor as to the terms on which any firm offer may be made. A further announcement will be made in due course. Shareholders are urged to take no action at this time.”
Menzies shares closed up almost 25% at 584p.