Kuwait-based Agility, one of the largest logistics companies in the Middle East and North Africa, will fully acquire UK-based John Menzies for £571 million ($751m) to create an airport services giant amid a steady recovery in air travel from the Covid-19 pandemic.
Menzies will be combined with National Aviation Services, a unit of Kuwait's Agility, once the deal receives approval from the shareholders of the two companies, Agility said in a statement on Wednesday.
“If approved by Menzies’ shareholders and regulatory authorities, the deal will create an industry powerhouse in aviation services,” said the Kuwait company, which holds a 19 per cent stake in Menzies.
The boards of the two companies reached an agreement on the terms of the deal, including a cash offer to acquire 100 per cent of the ordinary shares in Menzies at a price of 608 pence a share, Agility said.
The deal values Menzies at approximately £571m on a fully diluted basis and £763m on an enterprise value basis.
John Menzies had previously rejected a $636m takeover bid by NAS, saying that the offer undervalued the company.
The combined group is expected to be the largest airport services company in the world by the number of countries it operates in, second-largest in terms of airports served, and third-largest in terms of revenue. It will have about 35,000 employees with a presence at more than 250 airports in 57 countries, handling more than 600,000 aircraft turns per year.
“The NAS-Menzies combination brings together highly complementary operations and ensures that the combined business has the scale and resources to grow,” Hassan El-Houry, chief executive of NAS, said.
“Menzies shareholders will realise a premium in return for supporting the transaction. Customers will benefit from Menzies’ operational excellence at more airports around the world and will be able to choose from a broader product offering.”
Menzies and NAS posted combined revenues in excess of $1.5 billion in 2021. The deal is expected to close in the third quarter of 2022.
The combination will "create a strong and resilient industry player, well positioned to grow and drive future earnings”, said Tarek Sultan, vice-chairman of Agility. “We expect this acquisition to further diversify Agility’s revenue base and strengthen cash flow generation.”
Agility reported a sharp rise in 2021 full-year net profit after an exceptional gain from the sale of its GIL logistics unit to Danish company DSV Panalpina.
Net profit attributable to equity holders of the parent company for the period ending December 31 reached 977.4m Kuwaiti dinars ($3.21bn), up from 41.57m dinars in the corresponding period in 2020, Agility said last week.