The board of John Menzies has engaged with its shareholders after it received a "preliminary and unsolicited proposal" from National Aviation Services (NAS) Holding to acquire the entire share capital of the company at a price of 510 pence per share in cash, or around £468m.
The board engaged with its shareholders following the announcement on February 9, where it previously announced that it had unanimously rejected the NAS proposal.
It concluded that it is opportunistic, conditional and that the terms fundamentally undervalued Menzies and its future prospects.
However, NAS group chief executive Hassan El-Houry urged Menzies’ shareholders to back the offer, arguing that it represents a “compelling opportunity for shareholders to realise full value for their investment in cash”.
When adjusted for permanent cost savings of £25m that the management team of Menzies has already delivered.
The NAS Proposal implies an earnings before tax at 6.4 times, which is significantly lower than achieved in comparable transactions over the last decade in its sector for other assets of Menzies’ size.
The board argued the NAS Proposal failed to take account of the execution of Menzies’ strategy and the significant potential value creation.
It argued the full impact of management actions had not yet reflected in Menzies’ valuation and the return of underlying volumes to pre-pandemic levels with Menzies being well positioned to benefit as a global player in a market with proven structural growth.
It also noted the pipeline of higher margin opportunities that Menzies's has will generate approximately £80m of net new annualised revenue from commercial opportunities and approximately £150-200m of new revenue over the short to medium term from several business development opportunities.
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.
The stock market listing said: “The board will consider the best interests of Menzies’ shareholders and all actions to maximise shareholder value.
“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.”
NAS is required to announce a “firm intention” to make an offer to Menzies by 5pm on March 9.
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