Shareholders Back Strategic Expansion with Overwhelming Support
Shareholders of SATS, a leading inflight catering and ground handling firm, have overwhelmingly approved its acquisition of Paris-based air cargo handler Worldwide Flight Services (WFS).
Strong Support for Transformational Deal
At an extraordinary general meeting held on 18 January, 96.8% of votes, representing 626.9 million shares, were cast in favour of the S$1.8 billion transaction. Temasek, through its subsidiary Venezio Investments, played a key role with its 39.68% stake in SATS. Only 3.2% of votes opposed the acquisition.
Financing and Strategic Outlook
The acquisition will be financed via a mix of funding sources: up to S$800 million through a renounceable underwritten rights issue, S$700 million from a term loan, and S$320 million from SATS’ internal cash reserves. Regulatory approvals are pending, and the deal is expected to close by March or April 2023.
This deal, which includes 201 cargo and ground stations across 23 countries, is described by SATS as a transformative move to establish a global Americas-Europe-Asia-Pacific network. Chief Executive Kerry Mok emphasised that the acquisition will unlock strategic value and growth opportunities, enhancing the company’s capacity to provide end-to-end solutions for its global clientele.
Earnings and Market Reaction
Despite initial plans projecting a significant earnings boost, the revised funding approach reduces the expected financial uplift. Pro forma net profit will rise from S$20 million to S$28 million, while earnings per share will increase marginally from 1.8 to 1.9 Singapore cents.
SATS’ share price has fallen by 24% since the announcement in September 2022, reflecting investor caution over the increased debt load and a scaled-down rights issue. However, Mok remains optimistic, stating that the acquisition will position SATS for sustainable, profitable growth.
With shareholder approval secured, SATS is set to expand its portfolio significantly and strengthen its position as a global player in cargo handling and ground services.
