John Menzies and Stagecoach stock market departures are major blows to Scotland: Ian McConnell

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

UK households meanwhile find themselves in the grip of a cost-of-living crisis, with annual consumer prices index inflation now tipped by the Bank of England to peak at around eight per cent this spring.

So it is hardly surprising that relatively few people will have had time or space to reflect on the disappearance of another two big Scottish names from the stock market.

Stagecoach, founded in 1980 by Sir Brian Souter and Dame Ann Gloag, has had a high profile during its decades on the stock market. It has been in the headlines for everything from less-than-glowing assessments from competition authorities back in the 1990s to a huge expansion into the US and then a retrenchment on that front, as well as for some big moves into rail and then a withdrawal from that arena. The transport company agreed a merger with the much larger National Express late last year. However, as competition authorities examined this deal, a fund managed by Germany’s DWS Infrastructure, which is ultimately part of Deutsche Bank, stepped in last month with a near-£600 million bid that has won the backing of Stagecoach’s board.

This may well be better news than the National Express bid from a Scottish perspective, given DWS’s seeming commitment to retaining the headquarters of Stagecoach in Perth. However, that is not to say the loss of Stagecoach from the stock market is anything other than a further major blow to corporate Scotland.

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Stagecoach is, of course, youthful compared with John Menzies, which is also set to disappear from the stock market after its announcement last week that it had reached agreement on the terms of a £571m bid from the owner of Kuwait-based rival National Aviation Services.

People will recall the history of John Menzies in different ways depending on their age. However, many will remember the business best for its former eponymous, and ubiquitous, high street presence. Some might recall the C60 or C90 blank cassette tapes from the late 1970s and early 1980s with the blue, white and orange branding. Or, also from around four decades ago, displays with ZX Spectrum, ZX81, Commodore 64, and BBC (Micro) computers. Or walking into John Menzies to pick up the latest vinyl single or album.

John Menzies’ shops were real linchpins of the high streets of Scottish towns and cities over decades.

Of course, the John Menzies name ultimately disappeared from high streets following the late-1990s acquisition of the group’s store portfolio in Scotland and south of the Border – which by then ran into the hundreds in terms of the number of outlets – by WH Smith.

John Menzies retained its own high street presence for a little while longer, through its ownership of the Early Learning Centre chain, but sold this business, which it had acquired in 1985, back in 2001.

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The company had by that point made major strides into the global aviation services market which was to become the single focus of the stock market-listed entity, with the company’s board agreeing in 2018 to sell the entire share capital of the distribution business to private equity player Endless LLP.

The history of the stock market-listed entity is detailed on its website and makes fascinating reading.

What oozes from the words is the spirit of entrepreneurialism exhibited by founder John Menzies and his sons, John R Menzies and Charles Menzies. And it is clear those who led John Menzies through the many decades that followed remained alert to business opportunities, in whatever sectors or markets these came along.

In 1833, the then 25-year-old John Menzies spotted a gap in the market. He left his London publishing job, and opened a bookshop at 61 Princes Street, Edinburgh, which the company notes was “to become the only wholesale bookseller north of the Border”.

The story of the founder continues as follows: “There followed a series of firsts. In 1837, he became the Scottish agent for sales of The Pickwick Papers – the first published work of Charles Dickens. In 1841, he became the agent for the famous periodical Punch…

“By the end of the 1840s, the golden age of rail, virtually every town in the UK was served by a 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 almost every part of Scotland, including in 1862, Waverley Station in the heart of Edinburgh.”

The tale goes on: “Although John Menzies’ achievements were remarkable, his sons John R and Charles Menzies continued with an era of extraordinary expansion, transforming a local business into a nationwide concern. Although led by the Menzies brothers, by the early part of the 20th century other trusted people were helping to manage our business. William Dawson and Robert Dickie, managers of the Edinburgh and Glasgow wholesalers, became directors, and technological innovation was at the forefront of our growth. Motorised vehicles were quickly adopted as the norm, and the horses were retired.”

What this fascinating historical story really brings to life is the huge timeframe over which the business has enjoyed success, embracing massive shifts in technology and society, and boldly entering new markets.

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

Fast-forward to 2017 and John Menzies notes it was by then, with the acquisition of ASIG, the “world’s largest into-plane fuelling business”, “firmly established as a global player in cargo, fuelling and ground handling”.

It has been quite a journey. And John Menzies has proved adept as a stock market-listed business at navigating various episodes of major turbulence.

The company notes that in 2009 “the global recession sparked by the banking financial crisis led to huge reductions in cargo volumes”. It observes that this was followed in 2010 by the closure of European airspace because of volcanic ash created by the eruption of Icelandic volcano Eyjafjallajökull.

Flagging the impact felt across the aviation sector, it adds: “It is fair to say that 2009 and 2010 were tumultuous. However, as John Menzies and his sons had done in previous years, we regrouped and continued measured growth through acquisition, innovation and stellar contract wins.”

There had been a period of hope – from the perspective of wishing Scotland to have a large, thriving group of stock market-listed businesses given the importance of this to the nation’s standing in the corporate world – when it had seemed John Menzies might prevail as an independent player. That it might be able to regroup once more after the impact of the coronavirus pandemic, amid a slew of contract wins, and find a smoother path on its own.

The NAS approach was initially dismissed by the board as being, among other things, “opportunistic”. It was easy to sympathise with such a sentiment, given John Menzies and much of the rest of the international aviation sector had been laid so low by the pandemic.

In the end, money talked and the venerable Scottish company’s board accepted a much improved 608p a share bid.

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

However, as should be clear to anyone from reading the company’s history or being aware of its fascinating evolution over decades and centuries, heavyweight Scottish businesses such as these do not grow on trees. So it must be a matter of regret when they lose their independence.