John Menzies to buy peer BBA’s aircraft services unit

LONDON: UK airport services and logistics group John Menzies Plc agreed to buy peer BBA Aviation Plc’s ASIG commercial aircraft services unit in a deal worth $202 million, taking a major step in consolidating a fragmented industry. 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. Investor Shareholder Value Management (SVM), which holds over 7 percent of the firm, has urged Menzies to pursue more deals, a call the company answered by naming Dermot Smurfit, with a strong deals background, as its chairman this year.

“We are still very vocal about advocating for a split,” SVM analyst Gianluca Ferrari told Reuters. “Nevertheless it has always been our view that the industry needs consolidation. The two things are not mutually exclusive. I think the scale will increase value.” Menzies has been trying to expand the aviation support business, which includes cargo and baggage handling and freight forwarding services and brings in most of its profits, as its once core newspaper and magazine distribution business continues to decline. Menzies said yesterday the proposed ASIG deal, which is expected to materially enhance its earnings in the first full year, would be funded via a 75 million pound ($99 million) fully underwritten rights issue and a new debt package.