Temasek-backed SATS said to tap advisers to review M&A strategy

APAC assets under management
A woman passes a logo of state investor Temasek Holdings at their office in Singapore July 8, 2014. REUTERS/Edgar Su

SATS Ltd., a Singapore-based provider of ground handling and catering services to airlines, is working with advisers to review its strategy amid increasing consolidation in the industry, people with knowledge of the matter said.

The company, which counts Temasek Holdings Pte as its biggest shareholder, is considering whether to more aggressively pursue growth through acquisitions, the people said. It could consider potential targets in Asia or Europe, said one of the people, who asked not to be identified because the information is private.

Deutsche Lufthansa AG has started a sale process for its LSG Sky Chefs catering arm, people with knowledge of the matter said in December. Last summer, Temasek and RRJ Capital agreed to invest about $1 billion in Swiss airline caterer Gategroup Holding AG, while HNA Group Co. has been seeking a buyer for cargo handler Swissport International, Bloomberg News previously reported.

SATS has been conservative in dealmaking so far, with just $355 million of acquisitions announced over the last five years, according to data compiled by Bloomberg. Its biggest-ever transaction was the takeover of Singapore Food Industries Ltd. for about $314 million just over a decade ago, the data show.

Since then, the company has formed joint ventures as it expanded in markets like India, Malaysia and China, and into areas like cruise handling. No final decisions have been made, and SATS could still opt against pursuing larger acquisitions, the people said.

A representative for SATS referred Bloomberg queries to a statement about the company’s outlook released with its third-quarter results, declining to comment further. It’s seeking acquisitions that can help it accelerate the implementation of its strategy to “feed and connect Asia,” the statement shows.

SATS, led by Chief Executive Officer Alex Hungate since 2014, reported last week that its net income for the latest quarter rose 3.5 percent to S$69 million ($51 million). The company, which has a market value of $4.2 billion, has a presence in 13 countries across Asia and the Middle East.

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