Regulatory Announcements
20 November 2000
On 25 July 2000 Menzies announced the proposed acquisition of OGS for US$117.8 million (£82.8 million) subject to possible adjustment for items specified in the acquisition agreement dated 24 July 2000 (the "Acquisition Agreement") between Menzies and the Vendor. A summary of the Acquisition Agreement was included in the shareholder circular, dated 23 August 2000 (the "Circular").
As contemplated in the Acquisition Agreement, Menzies and the Vendor have now agreed to exclude certain minority shareholdings from the transaction, where some of the consents summarised in Part IV of the Circular have not as yet been obtained. This has reduced the purchase price by US$10.4 million (£7.3 million).
However, if specified conditions are subsequently satisfied, Menzies may purchase these minority shareholdings within three months of completion.
Since the announcement of 25 July 2000 the OGS business has experienced some deterioration in trading. As a result, the Board of Menzies (the "Board") currently anticipates that the operating profit of OGS during the year ending 31 December 2000 will show some reduction in comparison to the financial performance for 1999. As a consequence, a reduction of US$13.0 million (£9.1 million) from the consideration has been agreed to compensate for this short-term change to OGS's financial performance.
Menzies expects to reverse this deterioration by restructuring the under-performing OGS operations and achieving, as highlighted in the Circular, efficiencies in the regional offices within the combined business.
As detailed in the Circular, the consideration payable has been further adjusted for differences between actual and budgeted amounts of capital expenditure between 1 April 2000 and completion together with net cash balances at closing - an overall increase in consideration of US$10.6 million (£7.4 million). Additional completion adjustments, primarily reflecting movements in working capital between 31 March 2000 and completion will be made following the finalisation of the balance sheet at closing.
Taking into account these agreed adjustments to the purchase price, the consideration for the acquisition of OGS has been reduced by US$12.8 million (£9.0 million), summarised as follows:
Summary of Adjustments to Consideration in Acquisition Agreement
US$ million
Consideration per Acquisition Agreement 117.8
Minority shareholdings excluded (10.4)
Agreed price reduction (13.0)
Capital expenditure adjustment 0.2
Net cash balances 10.4
Revised consideration 105.0
In the light of the recent trading of OGS, the Board now believes that the inclusion of five months of OGS's results, before taking account of goodwill amortisation and other non-recurring costs, will be marginally dilutive to Menzies' earnings per share for the year ending 5 May 2001. The Board is, however, confident that the contribution made by OGS will significantly improve once planned restructuring is implemented and expects that in the year ending 4 May 2002 the inclusion of OGS's results, before taking account of goodwill amortisation and non-recurring costs, will enhance Menzies' earnings per share.
Aviation is a worldwide business and the acquisition of OGS will enable Menzies Aviation Group ("MAG") to continue its development into a significant and established international business. The Board believes that a global product offering, able to service airlines in a substantial number of markets is necessary to maintain competitive effectiveness. In addition, the enlarged group will be strongly positioned to respond to the needs of airlines and global airline alliances, as well as to capitalise on the opportunities arising from the deregulation of aviation and airport markets.
The Board has, therefore, reaffirmed its view of the acquisition stated in the Circular that the enlarged group will achieve significant benefits from the substantial growth opportunities that the combined business will bring and that Menzies' prospects will be enhanced by the acquisition.
Note:
Nothing in this announcement should be construed as a profit forecast or be interpreted to mean that earnings per share of Menzies for the current year or future years will necessarily match or exceed the historical published earnings per share of Menzies.
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John Menzies plc completes the acquisition of Ogden Ground Services
John Menzies plc ("Menzies") today announces that it has now completed the acquisition of Ogden Ground Services ("OGS"), the global ground handling business of Ogden Corporation (the "Vendor") for US$105.0 million (£73.8 million) in cash, a reduction of US$12.8 million (£9.0 million) on the price announced at signing.On 25 July 2000 Menzies announced the proposed acquisition of OGS for US$117.8 million (£82.8 million) subject to possible adjustment for items specified in the acquisition agreement dated 24 July 2000 (the "Acquisition Agreement") between Menzies and the Vendor. A summary of the Acquisition Agreement was included in the shareholder circular, dated 23 August 2000 (the "Circular").
As contemplated in the Acquisition Agreement, Menzies and the Vendor have now agreed to exclude certain minority shareholdings from the transaction, where some of the consents summarised in Part IV of the Circular have not as yet been obtained. This has reduced the purchase price by US$10.4 million (£7.3 million).
However, if specified conditions are subsequently satisfied, Menzies may purchase these minority shareholdings within three months of completion.
Since the announcement of 25 July 2000 the OGS business has experienced some deterioration in trading. As a result, the Board of Menzies (the "Board") currently anticipates that the operating profit of OGS during the year ending 31 December 2000 will show some reduction in comparison to the financial performance for 1999. As a consequence, a reduction of US$13.0 million (£9.1 million) from the consideration has been agreed to compensate for this short-term change to OGS's financial performance.
Menzies expects to reverse this deterioration by restructuring the under-performing OGS operations and achieving, as highlighted in the Circular, efficiencies in the regional offices within the combined business.
As detailed in the Circular, the consideration payable has been further adjusted for differences between actual and budgeted amounts of capital expenditure between 1 April 2000 and completion together with net cash balances at closing - an overall increase in consideration of US$10.6 million (£7.4 million). Additional completion adjustments, primarily reflecting movements in working capital between 31 March 2000 and completion will be made following the finalisation of the balance sheet at closing.
Taking into account these agreed adjustments to the purchase price, the consideration for the acquisition of OGS has been reduced by US$12.8 million (£9.0 million), summarised as follows:
Summary of Adjustments to Consideration in Acquisition Agreement
US$ million
Consideration per Acquisition Agreement 117.8
Minority shareholdings excluded (10.4)
Agreed price reduction (13.0)
Capital expenditure adjustment 0.2
Net cash balances 10.4
Revised consideration 105.0
In the light of the recent trading of OGS, the Board now believes that the inclusion of five months of OGS's results, before taking account of goodwill amortisation and other non-recurring costs, will be marginally dilutive to Menzies' earnings per share for the year ending 5 May 2001. The Board is, however, confident that the contribution made by OGS will significantly improve once planned restructuring is implemented and expects that in the year ending 4 May 2002 the inclusion of OGS's results, before taking account of goodwill amortisation and non-recurring costs, will enhance Menzies' earnings per share.
Aviation is a worldwide business and the acquisition of OGS will enable Menzies Aviation Group ("MAG") to continue its development into a significant and established international business. The Board believes that a global product offering, able to service airlines in a substantial number of markets is necessary to maintain competitive effectiveness. In addition, the enlarged group will be strongly positioned to respond to the needs of airlines and global airline alliances, as well as to capitalise on the opportunities arising from the deregulation of aviation and airport markets.
The Board has, therefore, reaffirmed its view of the acquisition stated in the Circular that the enlarged group will achieve significant benefits from the substantial growth opportunities that the combined business will bring and that Menzies' prospects will be enhanced by the acquisition.
Note:
Nothing in this announcement should be construed as a profit forecast or be interpreted to mean that earnings per share of Menzies for the current year or future years will necessarily match or exceed the historical published earnings per share of Menzies.
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