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"Menzies set for take-off as major airport player"



Wednesday, April 4, 2001

Menzies set for take-off as major airport player
United Kingdom - The Scotsman


JOHN Menzies, the Edinburgh-based airport services and newspaper
distribution group, is planning a possible bid of up to £200 million for the
ground handling business of Swissair.

A successful bid for the division, Swissport, which services 125 airports in
25 countries, would be Menziesís biggest acquisition yet and transform it
into a major international force in airport ground handling.

SAirGroup, the troubled parent of Swissair, is to sell various non-core
businesses, thought to include Swissport, as part of a major strategic
shake-up after diving £1.1 billion into the red for 2000.

David Mackay, the chief executive of John Menzies, said last night: "We are
very interested in developing our airport ground handling business and
Swissport are one of the top five in the world.

"We will look at it hard along with others we are also considering at the
moment."

Menzies paid £80 million last year for the US-based airport ground handling
group Ogden, which made it number four in the world, not including
refuelling services, and more or less doubled annual turnover in the
aviation services arm to about £200 million.

Swissport is number two in the world if refuelling services are included, Mr
Mackay said.

Menzies has set out its stall to grow its airport services arm to be bigger
than its much longer established newspaper distribution business, where
annual turnover is about £850 million.

SAirGroup did not specify Swissport as one of the businesses it will
definitely sell. But one well-placed source said: "The market is saying that
it is very likely to come up for grabs. Although it was not mentioned
specifically, there is a view that it is very much non-core."

It is understood that various venture capital groups, both from the UK and
elsewhere in continental Europe, have already had some discussions with
SAirGroup over buying both Swissport and other subsidiaries, including the
Crossair commuter jets business and the Gate Gourmet airline catering arm.

Sources said that Swissport would probably be worth between 200 million and
300 million euros (£124-£186 million), but possibly over £200 million.

Menzies said in January it could afford acquisitions of £100-£150 million,
but Mr Mackay said that for the right deal the group could go higher. He
added: "Where there is a will there is a way."

He said that Menzies would be in a position to extract more synergies with
its existing ground handling operations than most venture capital groups.

Unlike Menzies, Swissport offers aircraft refuelling.

Menzies aviation services business made profits of £2 million in the half
year to November, up from £1.6 million, on sales of £47.4 million, up from
£38.5 million.

Shares in John Menzies closed last night unchanged at 425p, valuing it at
£240 million, against a high for the year of 450p and a low of 360p.

Figures from research group SMi recently estimated the world market for
ground handling to be worth $27 billion annually. It said about 75 per cent
of the market is still controlled by airlines and airports, "but
increasingly they are disposing of ground handling as it does not represent
their core business. These disposals represent opportunities to expand."

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