Air services

A British air services group flies close to the sun

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

LONDON – John Menzies channels Icarus. The £420million British air services group turned down two offers from National Aviation Services (NAS), part of the $7.5billion Kuwait-listed Agility Public Warehousing group. The latest 510 pence per share represents a 76% premium to its February 2 price.

In hindsight from the pandemic, Menzies can play hardball. Eight similar deals over the past decade have closed at an average of 9.8 times EBITDA, compared to NAS’s 6.4 times offer. Put Menzies’ £102m EBITDA on the same multiple and it would be worth double the £470m on offer – and even more if Menzies’ growth plans materialize. NAS’s Kuwaiti state backers also have deep pockets.

Yet the health of the airline industry remains uncertain, making scale desirable. NAS has until March 9 to submit a formal offer, but Menzies’ 458 pence share price does not suggest investors are anticipating another raise. If NAS pulls away, Menzies could end up with a 300p share price and pissed off shareholders. (By George Hay)

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

(Editing by Ed Cropley and Oliver Taslic) ((SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: https://bit.ly/BVsubscribe))