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Investor urges John Menzies to consider splitting up

Published 30/04/2015, 12:20
Updated 30/04/2015, 12:22
© Reuters.  Investor urges John Menzies to consider splitting up

© Reuters. Investor urges John Menzies to consider splitting up

By Aastha Agnihotri and Esha Vaish

(Reuters) - An investor in John Menzies Plc (L:MNZS) has called on the Scottish company to consider splitting up, believing its distribution and aviation services businesses would be worth more apart.

Swiss investment firm Lakestreet Capital Partners AG's move is the latest example of shareholder activism in Europe, coming on the heels of shareholders in UBS (VX:UBSG), Alliance Trust (LONDON:ATST) and DMG Mori Seiki AG seeking spin offs or board changes.

John Menzies shares rose 6 percent following the announcement from Lakestreet on Thursday, making them among the top gainers in London. The stock had lost almost half its value since the beginning of 2014.

John Menzies said it would not be making any comment on Lakestreet's statement.

Lakestreet, a top 10 investor with an about 3 percent stake, first bought shares in John Menzies in the third quarter of 2014. It said talks were ongoing with the company's management to improve revenue performance and margins.

Lakestreet considers itself an active investor and targets companies it believes are undervalued, but have strong long-term growth potential. The firm's investment strategy also includes engaging with company managements.

John Menzies started as a chain of newsagent shops and was the Scottish agent for the monthly instalments of Charles Dickens' first novel, The Pickwick Papers.

The company has been trying to expand its aviation support business, which includes cargo and baggage handling and brings in a majority of its profits, as dwindling demand has stymied the growth of the newspaper and magazine distribution unit.

The company said in November that the loss of some British Airways (L:ICAG) business at London's Heathrow airport, as well as contract losses in Colombia would hurt the results at its aviation services unit this year.

Lakestreet said on Thursday that if the two units were valued on a stand-alone basis, the enterprise value (equity plus debt) of John Menzies could be around 525 million pounds.

John Menzies had an enterprise value of 334.7 million pounds, according to Thomson Reuters StarMine data.

None of John Menzies' top five shareholders immediately commented on the matter.

Lakestreet said talks with the management were expected to continue ahead of the company's annual shareholder meeting on May 15.

John Menzies shares were up 5.9 percent at 383.25 pence at 1112 GMT.

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