Menzies’ merger with ASIG, rival BBA Aviation’s ground handling and fuel service provider, could be delayed until next year because of government concerns about the deal.
The Times reported that the Competition and Markets Authority said that the $202 million merger with ASIG would lead to a substantial lessening of competition. According to the report, the regulator said that since the two companies were close competitors at Aberdeen airport, a merger would leave Swissport as the only other credible bidder for airlines for a range of services. However, the authority found that at other airports like Manchester and Heathrow would offer enough rivals that could bid for future contracts, according to the report.
The Times report stated Menzies has until Dec. 22 to offer a solution. Otherwise, the deal is subject to an in-depth investigation.
Menzies announced the acquisition in September,
“This is a transformational deal for Menzies and will significantly increase Menzies Aviation’s footprint globally while also adding fuelling to our operations. The transaction will create one of the largest aviation services businesses in the world, doubling the size of our North American operations, while strengthening Menzies Aviation’s service offering at major international gateways such as London Heathrow, San Francisco, Denver and Los Angeles," Dermot Smurfit, Chairman of Menzies, said in a press release. “The Board is confident of realising significant cost synergies following the Acquisition and it is expected to deliver material enhancement in underlying earnings per share in its first full financial year of ownership.”
ASIG is one of the largest independent providers of commercial airline services in the world. Headquartered in Orlando, FL, it currently has operations in 88 locations across seven countries and is one of the market leaders for into plane fueling and fuel farm management services in North America and the UK, where it also has ground handling operations in high-traffic airports as well as small and medium sized airports. ASIG achieved revenues of $415.8 million (£272.0 million) in 2015.
In a press release, Menzies stated its Board believes that the strategic rationale for the acquisition is compelling and in strong alignment with stated strategic priorities for Menzies Aviation, representing an excellent opportunity to accelerate Menzies' strategy for growth in the aviation sector.