ICYMI: Sats’ acquisition target is in the red

With profitability at both Sats and WFS under pressure, the risks of their proposed combination have probably increased

Ben Paul

Published Mon, Dec 5, 2022 · 05:50 AM

ONE of the most interesting stories I read in The Business Times this past week was about Worldwide Flight Services (WFS) chief executive Craig Smyth expecting further, near-term softness in the global air freight sector before an eventual recovery.

Two months ago, shares in Sats sank precipitously after the company said it would acquire WFS, the largest air cargo handling firm in the world. One concern about the deal was that air cargo demand might temporarily soften as the pandemic subsides. Another was that Sats would ultimately fund the acquisition through a big, deeply-discounted rights issue of new shares.

Sats has attempted to address the market’s concerns about the looming rights issue a couple of times. This past week, Sats said it only plans to tap its shareholders for S$800 million. The rest of the S$1.8 billion acquisition of WFS will be funded through a S$700 million three-year, euro-…