Menzies Aviation seeks antitrust approval for 7.7 mln pound Skystar acquisition

Menzies Aviation (New Zealand), an airport baggage handling services arm of UK's John Menzies Plc, is seeking antitrust approval to buy the Skystar Airport Services unit at Christchurch and Dunedin airports as part of a 7.7 million pound deal spanning both sides of the Tasman.

The New Zealand Menzies unit, with local annual revenue of some $31 million, has applied to the Commerce Commission for clearance to buy the Skystar operations, which are owned by ASX-listed Monadelphous Group. The local Skystar operations reported annual sales of $4.7 million in the year ended June 30, 2012, according to the latest financial statements lodged with the Companies Office.

The New Zealand acquisition is part of a bigger purchase for the British company, which last week said it had agreed to buy the Skystar Australasian ground handling business for 7.7 million pounds as part of a strategy to expand into attractive growth markets.

In its application to the Commerce Commission, Menzies said the company's commercial rationale was to expand its operations in Perth and pick up business in other parts of Australia where it doesn't yet operate.

"Despite the aggregation in the relevant markets, the proposed acquisition of Skystar New Zealand by Menzies New Zealand will not have the effect or likely effect of substantially lessening competition in a market," Menzies said in its application to the regulator. "This is because Menzies New Zealand will be constrained post-acquisition by near and potential competitors in the relevant markets, and by the countervailing power of its customer airlines."

National carrier Air New Zealand will remain the dominant player in the market, with an estimated 65 percent of market share at Christchurch airport, 70 percent at Dunedin airport, according to the Menzies application. Across the country's four major airports, Air NZ holds 80 percent of the market, followed by Skycare with 9 percent, Menzies with 7 percent and Skystar with 4 percent.

Menzies said it will combine certain operations if the deal gets the go-ahead, reducing duplication of effort and costs, with the integration expected to take six months.

(BusinessDesk)