John Menzies shares surge 24% after Kuwaiti suitor buys $100m stake

John Menzies shares surge 24% after Kuwaiti suitor buys $100m stake following two takeover rejections

  • National Aviation Services (NAS) bought over 12m Menzies shares at 605p each 
  • John Menzies has seen its share price skyrocket by 162% over the last 12 months 
  • Menzies offers services from plane fueling to maintenance and ground handling

Shares in John Menzies soared again on Thursday after the Kuwaiti company that recently made two failed bids for the aviation services group bought a $100million (£73.4million) stake in the business.

The Edinburgh-based firm saw its share price skyrocket by nearly a quarter as National Aviation Services (NAS) became its largest shareholder after purchasing more than 12 million shares at 605p each, equivalent to a 13.2 per cent stake.

This represents more than double Menzies’ closing share price a fortnight ago, when NAS made its second takeover offer, and is 81 per cent higher than its value the day before it entered its offer period.

Rejection: John Menzies had derided a previous proposal from NAS as ‘highly opportunistic’ and one that failed to properly value its future growth prospects

It also means that any subsequent proposal for Menzies – one of Scotland’s oldest businesses dating back to 1833 – must not fall below this price, in accordance with City takeover rules.

A subsidiary of the Kuwait-based logistics giant Agility Public Warehousing Company, NAS provides aviation services such as ground handling and security across dozens of airports in the Middle East, Asia and Africa.

It made its first unsuccessful unsolicited bid for Menzies in mid-January with a 460p per share proposition, before following this up about a fortnight later with a second offer worth £469million.

Yet John Menzies derided the latter proposal as ‘highly opportunistic’, arguing the bid failed to properly value its future growth prospects and was poorly timed considering underlying sales volumes remain below pre-pandemic levels.

The firm offers services from plane fueling to maintenance and ground handling and has operations at over 200 airports worldwide, including London Heathrow, JFK International in New York and Frankfurt Airport in Germany.

Due to the emergence of the coronavirus pandemic, it plunged to a £120.5million loss as severe international travel restrictions caused the number of plane flights to dramatically tumble.

Its share price plummeted by over 80 per cent in tandem with the drop in demand for air travel before gradually rebounding as Covid-19 vaccines were developed, rolled out on a mass scale, and travel curbs loosened.

Since NAS has expressed interest in purchasing the business, shares in John Menzies have now surged above their 2019 levels and are 162 per cent more valuable than they were 12 months ago.

NAS is still hopeful of acquiring the company on the grounds that it has ‘a strong strategic and financial rationale’, and has called on bosses at Menzies to provide ‘information access and dialogue with management.’

Hassan El-Houry, the chief executive of NAS, 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.

He added: ‘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.’