Menzies facing a revolt after call for major review
THE board of distribution group John Menzies is braced for a showdown this week amid calls for a break-up of the Scottish company.
Swiss investment firm Lakestreet Capital is preparing to present its case for a major strategic review of the £2billion turnover business at a meeting in Edinburgh on Friday. It plans to use the platform as an opportunity to canvas support from other shareholders.
The 182-year-old company includes a distribution business that ships newspapers and magazines to WHSmith stores and brochures to travel agents.
But it has developed a more lucrative business interest in aviation support services, including luggage handling at 143 airports.
Lakestreet said it had raised concerns with the board over ‘whether keeping two businesses in one group is still in the best interests of John Menzies’ shareholders’ and that it had engaged in ‘constructive talks’ with management.
The biggest shareholder besides the Menzies family – US investment company Kabouter Management, with a 9.4 per cent stake – has indicated that it might sympathise with Lakestreet. It has said that the company’s structure of operating in two unrelated sectors ‘contributes significantly to the undervaluation of John Menzies’ stock today’.
But the Menzies family is understood to control about a fifth of the shares and Dundee-based publisher DC Thomson, a long-term supporter of the business, holds 8.4 per cent.
It is not yet clear if the family, which is believed to have about 15 separate holdings, would unite behind the management or whether individuals could be convinced to support a strategic review. Persuading any of them to support change is likely to be the key to Lakestreet’s ambitions, analysts said.
DC Thomson last month threw a spanner in the works of a bid by a US activist shareholder to overhaul the board of Dundee-based investment fund Alliance Trust by siding with the management.
Lakestreet said it believed two divisions would have a total value of £415million if they were separated. That compares with a market value of £260million on Friday, when Menzies’ shares closed at 421p. The stock has risen 15 per cent since Lakestreet revealed its position.