Sats shareholders vote ‘yes’ to buying world’s biggest air cargo handler WFS

SINGAPORE - Sats Ltd shareholders overwhelmingly approved the proposed acquisition of air cargo handler Worldwide Flight Services (WFS) at an extraordinary general meeting on Wednesday afternoon.

The vote,

which was held in person and via electronic means,

garnered 96.8 per cent of the total number of votes in favour of the resolution to approve the $1.82 billion transaction. In all, there were some 647.6 million shares represented by votes at the EGM, of which 626.9 million were in favour.

Sats needed just a simple majority of 50 per cent voting in favour. Voting was conducted by a simple poll, where shareholders vote “for”, “against” or abstained.

Temasek Holdings, which controls 39.68 per cent of Sats via its wholly owned unit Venezio Investments, voted in favour of the deal. Even excluding Temasek, Sats garnered an approval share of 89.7 per cent of the votes present.

“We are delighted and humbled to have received this affirmative vote of confidence from our shareholders,” said Mr Kerry Mok, president and chief executive officer of Sats. “It is a clear demonstration that our shareholders recognise the strategic value and growth opportunities that this transformational deal will unlock for Sats and all of our stakeholders.

“We will be better positioned to provide our global customer base with end-to-end solutions, while securing a pathway to profitable growth and uplifting our home-market base in Singapore.”

The purchase of WFS –

which will be financed

via $320 million of internal funds, some $700 million in euro-denominated term loans, and an $800 million rights issue of Sats shares – is expected to be completed in March-April 2023.

Mr Matthias Chan, head of research at SAC Capital, said that Sats’ decision to pursue the deal had been vindicated.

“Despite facing initial struggles like a more laden balance sheet and the absence of dividends for the first few years, shareholders have chosen to look at the longer-term potential,” he said. “This will make Sats a significantly larger aviation services provider amid border reopenings, with a footprint evenly spread across every major continent.”

Indeed, the deal had met with opposition from some shareholders who were concerned that Sats, which is predominantly a pan-Asian regional player with a strong balance sheet and a generous dividend payout record, would be financially weighed down by buying a much larger WFS.

But Sats insisted that

the deal was necessary to scale up and become a globally dominant player

in air cargo and logistics. Besides an Ebitda (earnings before interest, tax and depreciation) run rate of $100 million over the medium term, it said the combined entity would see Sats double its total revenue and boost Ebitda six-fold.

WFS, the world’s largest air cargo handling firm, is the dominant player in Europe and the Americas, handling some 1.7 million metric tonnes of cargo in 2021. It operates in 160 airports in 18 countries in five continents – with 800,000 sq m of cargo warehouse space – while handling 300 airline customers via 1,500 contracts.

For the Asia-centric Sats, this was a one-of-a-kind asset which complements it by offering end-to-end customer connectivity and access across global trade flows.

With the receipt of shareholder approvals, the proposed acquisition of WFS now remains subject to regulatory approvals in Europe, North America and other jurisdictions where it operates.