John Menzies plc – Recommended Cash Offer

30 March 2022

Recommended Final^[1] Cash Offer By Gil International Holdings V Limited

(A Wholly-Owned Subsidiary Of Agility Public Warehousing Company K.S.C.P.) For John Menzies Plc

to be effected by means of a Scheme of Arrangement

under Part 26 of the Companies Act 2006

Summary

• The board of directors of GIL International Holdings V Limited (“Bidco“), a wholly-owned subsidiary of Agility Public Warehousing Company K.S.C.P. (“Agility“), and the board of directors of John Menzies plc (“Menzies“) are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Bidco for the entire issued and to be issued ordinary share capital of Menzies not already owned by Bidco (the “Acquisition“).
• Under the terms of the Acquisition, each Menzies Shareholder will be entitled to receive:

608 pence in cash per Menzies Share (“the Final Offer Price”)

• The Acquisition values the entire issued and to be issued ordinary share capital of Menzies at approximately £571 million on a fully diluted basis and values Menzies at approximately £763 million on an enterprise value basis.
• The Final Offer Price represents a premium of approximately:

–  81 per cent. to the Closing Price of 335 pence per Menzies Share on 8 February 2022 (being the last Business Day prior to the commencement of the Offer Period);

–  107 per cent. to the Volume Weighted Average Price of 294 pence per Menzies Share during the three month period ended 8 February 2022 (being the last Business Day prior to the commencement of the Offer Period); and

–  104 per cent. to the Volume Weighted Average Price of 298 pence per Menzies Share during the six month period ended 8 February 2022 (being the last Business Day prior to the commencement of the Offer Period).

• Bidco has confirmed to the Menzies Board that the financial terms of the Acquisition are final and will not be increased, except that Bidco reserves the right to increase the amount of the Final Offer Price if there is an announcement on or after the date of this Announcement of a firm offer for Menzies by a third party offeror.
• The Acquisition implies an enterprise value multiple of approximately 10.7 times Menzies' underlying earnings before interest tax and depreciation for the year ended 31 December 2021 on a pre-IFRS 16 basis.
• It is intended that the Acquisition will be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act.

Compelling strategic rationale

• Following completion of the Acquisition, Agility will create the Combined Group by combining Menzies' business with that of its existing wholly-owned subsidiary, National Aviation Services (NAS).
• Menzies is a critical partner to the global aviation industry, delivering time-critical logistics services at more than 200 locations in more than 37 countries, across six continents, through a global team of more than 25,000 highly trained people. Menzies Aviation is firmly established as a global player in cargo, fuelling and ground handling with strong competitive positioning within each of its core focus areas and an excellent reputation in the market.
• NAS is an established and trusted aviation services provider in the emerging markets, with customers including many of the world's leading airlines such as British Airways, Air France, KLM, Emirates and Qatar Airways. It is also one of the industry's fastest growing regional aviation services providers, with a presence in more than 55 airports across the Middle East, Africa and South Asia.
• NAS is part of the Agility group, a global supply chain services, infrastructure and innovation company listed on the Kuwait Stock Exchange and the Dubai Financial Market. Agility has a proven track record of investing in and successfully scaling businesses sustainably and responsibly, both organically and through acquisitions.
• NAS and Agility have long admired Menzies' strong brand, long-standing operational excellence, broad global footprint, many product services, and strong culture and Scottish heritage. The combination of NAS and Menzies represents a compelling opportunity to:

– Create a global aviation services leader with greater scale and resources to deploy on growth opportunities: The Combined Group will be equipped with the scale and resources necessary to serve a broader customer base globally, and capitalise on growth opportunities as the aviation industry continues to recover from the effects of the COVID-19 pandemic. The Combined Group will have the capital to be able to invest in the talent development, technology, infrastructure, sustainability, and innovation required to accelerate growth.

– Leverage complementary footprints and product portfolios to create a truly global aviation services and air cargo platform: The Combined Group is expected to unite NAS' leadership in fast-growing emerging markets across the Middle East and Africa, with Menzies' strong footprint in large global markets in Europe, North America and Oceania. Customers will benefit from a more diversified product portfolio, and will be able to access Menzies' operational excellence and greater scale in more airports around the world. The Combined Group will be the largest airport services company in the world by the number of countries it operates in, second largest in terms of airports served, and is expected to be third largest in terms of revenue.^[2]

– Establish a stronger and more resilient entity that is better positioned to support the needs of the market: The Combined Group will expand the breadth and depth of service offerings to customers, as well as meet growing customer expectations to invest in areas including technology, new equipment, warehousing infrastructure and training. Together, the companies will be able to respond more effectively in an increasingly competitive market.

• The combined revenues of Menzies and NAS were in excess of $1.5 billion in 2021. The Combined Group is expected to have approximately 35,000 employees with a presence at more than 250 airports in 57 countries, handling more than 600,000 aircraft turns a year.
• Following completion of the Acquisition, it is intended that Menzies and NAS will be combined and managed by a team drawn from both Menzies and NAS with the current Chief Executive Officer, Chief Financial Officer and Chief Operating Officer of Menzies in these roles in the Combined Group. The current NAS CEO is expected to assume the role of Chair of the Combined Group. The Combined Group will be governed by a professional board of directors through an appropriate governance structure.
• On 17 February 2022, Agility Strategies Holding Limited, a wholly-owned subsidiary of Agility, acquired 12,133,893 Menzies Shares (representing approximately 13.2 per cent. of the issued ordinary share capital of Menzies). On 18 February 2022, Agility Strategies Holding Limited, acquired a further 5,300,000 Menzies shares (representing approximately 5.8 per cent. of the issued ordinary share capital of Menzies). These Menzies Shares have since been contributed to Bidco. Accordingly, as at the date of this Announcement, Bidco owns in aggregate 17,433,893 Menzies Shares (representing approximately 19.0 per cent. of the issued ordinary share capital of Menzies), making it the largest shareholder in Menzies.

Recommendation

• The Menzies Board, which has been so advised by Goldman Sachs International as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the Menzies Board, Goldman Sachs International has taken into account the commercial assessments of the Menzies Directors.

• Accordingly, the Menzies Board intends to recommend unanimously that the Menzies Shareholders vote or procure votes in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, if Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer), as the Menzies Directors who hold Menzies Shares (in a personal capacity or through a nominee) have irrevocably undertaken to do in respect of their own beneficial holdings (and their connected persons') of 2,991,571 Menzies Shares (representing, in aggregate, approximately 3.25 per cent. of the Menzies Shares in issue on 29 March 2022 (being the last Business Day prior to the date of this Announcement)).

Irrevocable undertakings and letters of intent

• In addition to the irrevocable undertakings from the Menzies Directors, Bidco has received letters of intent to vote or procure votes in favour of the Scheme at the Court Meeting and the Resolutions to be proposed at the General Meeting (or, if Bidco exercises its right to implement the Acquisition by way of a Takeover Offer, to accept such offer) from D.C. Thomson & Company Limited, Axxion S.A., WM Thomson & Sons (acting through its nominee) and SVM Asset Management in respect of 10,146,043 Menzies Shares (representing, in aggregate, approximately 11.04 per cent. of the Menzies Shares in issue on 29 March 2022 (being the last Business Day prior to the date of this Announcement)).
• In total therefore, as at the date of this Announcement, Bidco has received irrevocable undertakings and letters of intent to vote or procure votes in favour of the Scheme at the Court Meeting with respect to a total of 13,137,614 Menzies Shares (representing approximately 14.29 per cent. of the Menzies Shares in issue on 29 March 2022 (being the last Business Day prior to the date of this Announcement). Full details of the irrevocable undertakings and letters of intent received by Bidco are set out in Appendix III to the date of this Announcement.

Information on Menzies

• Menzies is an international aviation services provider of time critical ground services, fuel services and air cargo services. Menzies operates at more than 200 airports in 37 countries, supported by a global team of more than 25,000 highly trained people.
• In the 2021 financial year, Menzies handled 0.6 million aircraft turns, 1.7 million tonnes of cargo and fuelled 2.5 million turnarounds. Menzies has over 500 customers including Air Canada, Air China, Air France-KLM, American Airlines, Cathay Pacific, easyJet, Frontier Airlines, IAG, Qantas Group, Qatar Airways, Southwest, United Airlines, WestJet and Wizz Air. Best in class safety and security is the number one priority each day and every day.
• Menzies, one of Scotland's oldest and largest companies, was established in 1833 as a book seller on Edinburgh's Princes Street and is still headquartered in the city.

Information on Bidco, NAS and Agility

• Bidco has been formed under the regulations of the Abu Dhabi Global Market as an intermediate holding company for the Combined Group. It has not traded since its incorporation. Bidco is a wholly-owned subsidiary of Agility.
• NAS is also a wholly-owned subsidiary of Agility and a member of the Wider Bidco Group.  The NAS group, which was founded in 2003, provides airport services and ground handling services in more than 55 airports in the Middle East, Africa, and South Asia. The NAS group serves seven of the world's top ten airlines, and manages more than 50 airport lounges. In the 2021 financial year, NAS delivered EBIT of $31 million.
• Agility is a global supply chain, infrastructure and innovation company. Agility is listed on the Kuwait stock exchange and the Dubai Financial Market with a market capitalisation of approximately $8 billion, as at 29 March 2022 (being the last Business Day prior to the date of this Announcement). Agility is a long-term, multi-business operator and disciplined investor focusing on companies in high-growth sectors with strong fundamentals, reinforced by management teams with a strong track record, best-practices governance, and alignment with Agility's vision and values. Agility's subsidiary companies build and operate logistics parks, and offer airport services, e-commerce enablement, customs digitisation, remote infrastructure services, fuel logistics, and commercial real estate and facilities management in the world's fastest growing markets. Agility is also an investor in supply chain, real estate, and technology ventures around the world.
• Bidco owns in aggregate 17,433,893 Menzies Shares, representing approximately 19.0 per cent. of the issued ordinary share capital of Menzies as at the date of this Announcement, making it the largest shareholder in Menzies.

Timetable and Conditions

• It is intended that the Acquisition be implemented by way of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. The purpose of the Scheme is to provide for Bidco to become the owner of the whole of the issued and to be issued ordinary share capital of Menzies. The Scheme will be put to Scheme Shareholders at the Court Meeting and to Menzies Shareholders at the General Meeting. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least 75 per cent. in value of the Scheme Shares voted. The implementation of the Scheme must also be approved by Menzies Shareholders at the General Meeting.
• The Acquisition is subject to the Conditions and certain further terms set out in Appendix I and to the full terms and conditions which will be set out in the Scheme Document. The Conditions include the receipt of regulatory and antitrust approvals as further described in this Announcement.
• It is expected that the Scheme Document, containing further information about the Acquisition and notices of the Court Meeting and General Meeting, together with associated forms of proxy, will be posted to Menzies Shareholders within 28 days of this Announcement (or such later time as Menzies, Bidco and the Takeover Panel agree) and the Meetings are expected to be held as soon as possible thereafter giving the required notice for these Meetings.
• The Acquisition is currently expected to complete during the third quarter of 2022, subject to the satisfaction or waiver of the Conditions. An expected timetable of key events relating to the Acquisition will be provided in the Scheme Document.

Commenting on the Acquisition, Hassan El-Houry, Group Chief Executive Officer of NAS, said:

“This deal creates a world leader in airport services and unlocks value for all stakeholders. The NAS-Menzies combination brings together highly complementary operations and ensures that the combined business has the scale and resources to grow. Menzies shareholders will realize a premium in return for supporting the transaction. Customers will benefit from Menzies' operational excellence at more airports around the world and will be able to choose from a broader product offering. Employees of both companies will benefit from being part of a larger, stronger group that offers more career development and advancement opportunities. The combined business will have the capital to invest in the talent, technology, innovation, infrastructure, equipment, and sustainability leadership required to accelerate growth. “

Commenting on the Acquisition, Philipp Joeinig, Chairman and Chief Executive Officer of Menzies, said:

“The Menzies Directors believe that the offer represents a fair and recommendable price for shareholders which recognises Menzies' future prospects.

Menzies is an outstanding business with a long and rich history. The Board of Menzies applauds the work that the Menzies management team have done to steer the business through the challenging impacts of the pandemic and position the business for continued future growth and the next evolution in its journey.

The Menzies all-cash offer from Bidco represents an opportunity for current shareholders to realise value for their investment at an attractive premium and valuation multiple.”

Commenting on the Acquisition, Tarek Sultan, Vice-Chairman of Agility, said:

“Agility's focus is on growth and shareholder value creation. We are a long-term, multi-business operator and investor aiming to create value with a disciplined investment strategy that focuses on companies in high-growth sectors with strong fundamentals, reinforced by management teams with established records, best-practices governance, and alignment with Agility's vision and values.

Menzies is a good fit. The aviation sector has strong growth potential, and Menzies is one of the most-established providers in the industry, with a sustainability focus we share. A NAS-Menzies combination will create a strong and resilient industry player, well positioned to grow and drive future earnings. We expect this acquisition to further diversify Agility's revenue base and strengthen cash flow generation.”