IPOs of John Menzies and Stagecoach deal a major blow to Scotland: Ian McConnell


IN these turbulent times it is perhaps not particularly surprising that the imminent disappearance of two more Scottish companies who are household names from the stock market seems to have largely stayed under the radar of the political and corporate arenas.

Public and political attention is rightly focused on the horrifying Russian invasion of Ukraine.

And the corona pandemic is not over yet, even if we are hopefully on the way back to some kind of normality in this regard.

British households, meanwhile, are in the grip of a cost-of-living crisis, with annual CPI inflation now estimated by the Bank of England to peak at around 8% this spring.

So it’s hardly surprising that relatively few people have had the time or space to contemplate the disappearance of two other big Scottish names from the stock market.

Stagecoach, founded in 1980 by Sir Brian Souter and Dame Ann Gloag, enjoyed a high profile throughout its decades on the stock market. It’s been all in the headlines, from less than glamorous assessments by competition authorities in the 1990s, to huge expansion into the US and then a cutback on that front, to some big steps into the rails and then a retreat from that arena. At the end of last year, the transport company agreed on a merger with the much larger National Express. But when competition authorities scrutinized that deal, a fund managed by Germany’s DWS Infrastructure, which is ultimately part of Deutsche Bank, stepped in with a nearly £600m bid last month, which garnered the support of Stagecoach’s board.

This could well be better news than National Express’ takeover from a Scottish perspective, considering DWS appears committed to keeping Stagecoach’s headquarters in Perth. That’s not to say Stagecoach’s loss from the stock market is anything other than another major blow to the Scottish company.

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Stagecoach is of course young compared to John Menzies, who is also set to delist after announcing last week that it had reached agreement on the terms of a £571million bid from the owner of Kuwait-based rivals National Aviation had achieved services.

People will remember the John Menzies story in different ways depending on their age. However, many will remember the shop best for its former eponymous and ubiquitous presence on the high streets. Some may remember the C60 or C90 blank cartridges from the late 1970s and early 1980s with the blue, white and orange branding. Or, also some four decades ago, displays with ZX Spectrum, ZX81, Commodore 64 and BBC (Micro) computers. Or head into John Menzies to pick up the latest vinyl single or album.

The shops of John Menzies have been a focal point of the high streets of Scottish cities for decades.

Of course, the John Menzies name disappeared from the high streets for good after the group’s portfolio of stores in Scotland and south of the border – which by then numbered in the hundreds by store number – was acquired by WH Smith in the late 1990s.

John Menzies retained his own high street presence for a while through his ownership of the Early Learning Center chain, but sold that business, which he had acquired in 1985, in 2001.

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By this time the company had made major strides in the global aviation services market, which would become the sole focus of the publicly traded company, with the company’s board of directors agreeing in 2018 to sell the entire share capital of the distribution business to private equity players Endless LLP.

The history of the listed company is detailed and exciting to read on its website.

What emanates from the words is the entrepreneurial spirit of founder John Menzies and his sons John R. Menzies and Charles Menzies. And it is clear that those who guided John Menzies through the many decades that followed were alert to business opportunities in which sectors or markets they arose.

In 1833, the then 25-year-old John Menzies discovered a gap in the market. He quit his publishing job in London and opened a bookshop at 61 Princes Street in Edinburgh, which according to the company would “become the only book wholesaler north of the border”.

The founder’s story continues: “A series of firsts followed. In 1837 he became Scottish agent for the sale of The Pickwick Papers – the first published work by Charles Dickens. In 1841 he became an agent for the famous Punch magazine…

“By the late 1840s, the golden age of railways, virtually every town in the UK had a railway station and in 1857 a new phenomenon appeared – the railway bookstall. In just a few years, John Menzies had secured the rights to bookstalls in most parts of Scotland, including Waverley Station in the heart of Edinburgh in 1862.”

The story continues: “While John Menzies’ achievements were remarkable, his sons, John R. and Charles Menzies, continued an era of extraordinary expansion, transforming a local business into a nationwide corporation. Although we were managed by the Menzies brothers, other trusted individuals helped run our business in the early 1900s. William Dawson and Robert Dickie, wholesalers managers in Edinburgh and Glasgow, became directors and technological innovation has been at the forefront of our growth. Motorized vehicles quickly became the norm and horses were phased out.”

What really brings this fascinating historical story to life is the vast span of time the company has thrived, embracing massive changes in technology and society, and boldly entering new markets.

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John Menzies begins his story: “Our company was founded in 1833, 86 years before the world’s first non-stop transatlantic flight. It’s one of the things that makes our story unique.”

Fast forward to 2017 and John Menzies notes that by then it was “well established as a global player in cargo, fueling and ground handling” with the acquisition of ASIG, the “world’s largest aircraft fueling company”.

It’s been quite a journey. And as a public company, John Menzies has proven adept at navigating various episodes of major turmoil.

The company notes that in 2009, “the global recession triggered by the banking crisis resulted in a huge drop in cargo volumes.” She notes that this was followed in 2010 by the closure of European airspace due to volcanic ash produced by the eruption of Iceland’s Eyjafjallajökull volcano.

Noting the impact being felt across the aviation sector, she adds: “It’s fair to say that 2009 and 2010 were turbulent. However, as John Menzies and his sons had done in previous years, we regrouped and continued our measured growth through acquisitions, innovation and excellent signings.”

There had been a time of hope – from the perspective of wanting Scotland to have a large, thriving group of listed companies, given the importance that this has for the nation’s standing in the corporate world – when it seemed that John Menzies might prevail independent player. That it might be able to regroup amid a string of contract wins after the impact of the coronavirus pandemic and find a smoother path of its own.

The Chamber initially dismissed the NAS approach as “opportunistic”, among other things. Given that John Menzies and much of the rest of the international aviation sector had been so crushed by the pandemic, it was easy to sympathize with such a sentiment.

In the end, money spoke and the board of the venerable Scottish company accepted a much-improved offer of 608 pence per share.

Hopefully, with a solid Scottish presence, the company can still enjoy a bright future.

However, as should be clear to anyone who reads the company’s history or is aware of its fascinating development over the decades and centuries, heavyweight Scottish companies like these don’t grow on trees. So it must be unfortunate if they lose their independence.


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