John Menzies accepts new £550m takeover offer from Kuwaiti rival

Edinburgh-based aviation services company has been hit by downturn in flights during Covid pandemic

The British aviation services company John Menzies has agreed a £550m takeover deal with a Kuwaiti rival, in a move that is likely to end a price negotiation after four separate bids.

The Edinburgh-based company, which offers services ranging from cargo and baggage handling to passenger check-in and plane de-icing and refuelling, told the stock market on Monday that it would unanimously recommend a deal if National Aviation Services (NAS) confirms its bid of 608p a share.

Aviation services companies have been among the hardest hit during the coronavirus pandemic, as lockdown restrictions forced airlines to cut back flights for months. Outsourced services were especially vulnerable as airlines looked to cut costs as quickly as possible.

The takeover would cap one of the more extraordinary corporate stories on the London Stock Exchange. Menzies was founded in 1833 in Edinburgh as a bookshop, with the eponymous founder eventually becoming the first Scottish agent of the author Charles Dickens and the magazine Punch.

Newspaper distribution and a chain of newsagents and bookshops became an important part of the business and in 1948 Menzies opened its first outlet in an airport, before expanding into cargo handling in 1987.

It sold its retail operation in 1998 and four years ago sold its newspaper business to focus on aviation services, shortly before the air industry suffered its greatest crisis.

Menzies revealed the first two takeover approaches of 460p and 510p a share on 9 February. It described those initial unsolicited approaches as “highly opportunistic” because the valuation did not properly reflect the business’s worth before the pandemic.

NAS had returned with an offer of 605p a share, which was also rejected by the Menzies board before it accepted the final 608p offer.

However, Menzies shares traded short of that offer price on Monday morning, with shares gaining only 0.3% to hit 585p – although that was the highest level since September 2018.

Menzies said: “NAS has confirmed to the board that the financial terms of the final proposal are final and will not be increased” unless another bidder steps in with a higher bid. Under stock market rules NAS has until 9 March to make a formal offer.