United Kingdom airport services and logistics group John Menzies agreed to buy peer BBA Aviation’s ground handling and fuelling operations in a deal worth $202 million, taking a major step in consolidating a fragmented industry.
Advertisement
Menzies said the transaction will be part-financed through a fully underwritten equity rights issue and new debt package comprising a $250 million (£189 million) term loan and £150 million revolving credit facility “which will also replace existing indebtedness of the Group”.
John Menzies will buy the company for USD$202 million in a deal that is expected to close towards the end of the year.
The Board believes that the strategic rationale for the Acquisition is compelling and in strong alignment with ‘ stated strategic priorities forMenzies Aviation, representing an excellent opportunity to accelerate Menzies’ strategy for growth in the aviation sector. In particular, the Acquisition will strengthen the Menzies Aviation service offering at major intercontinental gateways such as London Heathrow, San Francisco, Denver and Los Angeles. The Flight Support businesses include Signature Flight Support, which is a fixed base operation (FBO) network, and Aircraft Service International Group (ASIG), a refueler.
Menzies has been under pressure to revamp its business, as a string of warnings and the departure of top executives attracted criticism from activist investors who have advocated splitting its aviation services and printed media distribution units.
Menzies chairman Dermot Smurfit said the deal would “significantly increase Menzies Aviation’s footprint globally…”
The deal for ASIG would make Menzies the world’s largest interplane fueller, doubling its existing North American operations and adding significant scale at major global gateways, including London’s Heathrow airport. ASIG is a leader in ITP fuelling and FFM in the United States and UK, bringing significant revenue streams which are both predictable and scalable. The Company offers a ground handling service to its airline customers.
Advertisement
ASIG’s EBITDA for the 12 months to 31 December 2015 was $31.9m. Shares in Menzies rose by more than 5% on the London Stock Exchange. It said that return on invested capital is expected to exceed weighted average cost of capital next year.
