Singapore-based SATS has announced that it will purchase Worldwide Flight Services (WFS) in an all-cash deal for €1.19 billion ($1.15bn). WFS is the world’s largest air cargo handling firm with a strong presence in North America and Europe, complimenting SATS’ dominance in Asia. Here’s more on the massive deal.

SATS on top

On Wednesday, SATS announced that it has successfully purchased WFS from Cerberus Capital Management for €1.187 billion ($1.15bn). The deal is expected to be a big winner for SATS, with increases in EBITDA by S$100 million ($69.6mn) through cost-cutting alone. With WFS showing healthy financials, the Singaporean ground services giant expects to see earnings per share to rise by 78% and revenue to jump by 200%.

In a statement about the deal, SATS CEO Kerry Mok said,

“This is a transformational opportunity for SATS and our proposed acquisition of WFS will create a global leader that can become the go-to provider of mission critical aviation services. From our hub in Singapore, and in our newly combined markets, SATS and WFS will be at the heart of global trade flows, operating in the world’s busiest airports and supporting the biggest companies.”

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SATS is a caterer and ground services handling company, with over 80% market share at Changi. Photo: SATS

The deal will focus on creating one cargo giant globally, spanning Asia, North America, Europe, and the Middle East for seamless transit across the two companies.

Different markets

The combined company will cover trade routes spanning 50% of the air cargo market in the highly competitive industry. WFS is currently present in half of the top 10 cargo in North America and EMEA, namely Chicago, Frankfurt, Los Angeles, Miami, and Paris. Meanwhile, SATS is present in four of the top 10 Asian hubs, namely Beijing, Hong Kong, Taipei, and its home of Singapore.

With a wide presence, SATS and WFS will be able to take on new assignments for specialized goods and increase general market share in the coming months and years. With online shopping demand showing no signs of slowing amid supply chain delays globally, SATS is setting itself up for a long-term market.

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WFS employees over 13,000 employees in EMEA and North America. Photo: WFS

WFS will become a wholly-owned subsidiary of SATS after closing, with its CEO and top management staying on. CEO Craig Smyth noted,

“As we look to our next stage of growth, this combination will deliver exciting benefits for our customers and our people. We have great respect for SATS and share similar values, and look forward to working with their senior team in building the pre-eminent aviation services platform. By bringing together our complementary strengths, we will be able to build on our trusted relationships around the world.”

Important deals

As airlines invest heavily in new freighters and kick off new routes globally, there are firms globally vying to manage tons of shipments every day. WFS has signed deals with giants like Lufthansa, Turkish Airlines, and more in recent months to boost capacity, while SATS has lucrative contracts with Singapore Airlines (both of whom share a parent company) and more. Now, both companies can combine forces to expand into the booming market.

Source: simpleflying.com

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