Company’s CEOs continue to publicly argue their valuation positions a week after rejection announcement
John Menzies (LSE:MNZS) reaffirmed its decision to reject an approach from Kuwait-based airport group Agility Logistics, in an increasingly bitter war-of-words between the companies.
The UK-based airport group last week said it rejected an offer from Agility’s subsidiary National Aviation Services (NAS), describing it as opportunistic and conditional and fundamentally undervaluing Menzies and its future prospects.
NAS proposed an all-cash offer to acquire Menzies for 510p per share, marking an improvement of the 17 January offer of 460p, which NAS said represented an enterprise value to underlying earnings multiple (EV/EBITDA) of 9.5x.
But Menzies believe the £469mln offer fails to take into account £25mln costs savings already delivered by the group, with the proposal implying a multiple closer to 6.4x.
The group said the offer failed to take account of the full impact of management actions, Menzies structural positioning as it returns to pre-pandemic levels of revenue, and the expectant $230-$280mln pipeline of higher margins in future commercial and business opportunities.
NAS previously said it considered Menzies past performance and the offer was based on the assumption of revenue recovery to pre-pandemic levels by early 2023.
Hassan El-Houry, group chief executive officer of NAS, last week said: “In our view, the fundamentals of Menzies and of the industry as a whole are unlikely to change substantially, notwithstanding cost-cutting measures by Menzies.
“Let’s be clear: even as air travel recovers, airlines will look to contain costs with their airport service providers.”
Menzies share price jumped by more than 30% following announcement of the rejection last week, with a closing value of 465p on 14 February compared to 332.28p on 8 February.
Following the initial rejection of the proposal, Menzies CEO Philipp Joeinig 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.”
El-Houry responded by reaffirming NAS’s position on the value of Menzies, saying he saw no reason to adjust his view based on the information Menzies has shared publicly.
“Our view is that Menzies has a strong brand legacy with a geographic presence that is complementary to NAS, but as operators ourselves, we also see a sector facing a number of challenges and a company that lacks the balance sheet to thrive.
“Unfortunately, Menzies’ management has not meaningfully engaged in a way that changes our view.”
