A British air services group flies close to the sun

An airplane is seen at sunrise at the international airport in Munich, Germany, January 9, 2018. REUTERS/Michaela Rehle

LONDON, Feb 10 (Reuters Breakingviews) – John Menzies (MNZS.L) channels Icarus. The 420 million pound British air services group has refuse two offerings from National Aviation Services (NAS), which is part of the $7.5 billion Agility Public Warehousing Group (AGLT.KW), listed in Kuwait. The last 510 pence per share one represented a 76% premium to its February 2 price.

In hindsight from the pandemic, Menzies can play hardball. Eight similar offers over the past decade have averaged 9.8 times EBITDA, compared to 6.4 times NAS’s supply. 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 leaves, Menzies could end up with a 300p share price and pissed off shareholders. (By George Hay)

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Editing by Ed Cropley and Oliver Taslic