John Menzies’s shares took off this morning, soaring 34.03 per cent after the airport services firm rejected a £468m ($636m) takeover proposal.
The Edinburgh-based company said the proposal made by Kuwait firm Agility Public Warehousing was “entirely opportunistic” as it undervalued the company’s worth.
The aviation services provider said Agility Public Warehousing’s proposal of buying shares at 510p followed an earlier one, which saw the Kuwait firm offer 450p per share.
Following the announcement, analysts at Shore Capital decided to withdraw their buy recommendation.
“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,” said Menzies’s chief executive Philipp Joeinig.
“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.”
Following two disastrous years plagued by the pandemic, Menzies believes it’s well-positioned for recovery as the aviation sector is getting back on its feet.
Since 2019, the group removed £25m worth of costs and refocussed its commercial approach to generate £120m of annual net revenue. In 2022, the company expects net revenue to be around £80m following its decision to capitalise on emerging markets.
Commenting on the news, David Warnock-Smith, professor of aviation management at Buckinghamshire New University, said the offer came from a much smaller player in the handling sector.
“Menzies, like all other aviation players saw a reduction in revenues in 2020, but a series of new contracts with airlines has seen renewed confidence,” he told City A.M.
“Menzies is also a global player with a presence in many world countries whereas NAS is a more local player in with a presence only in the Middle East and South Asia. They have ambitions to be a global player and the backing of their larger parent company, but would not represent an attractive proposition to Menzies at this time.”