SATS will go ahead to buy Worldwide Flight Services – a global cargo handling business with presence across 18 countries in five continents.
At first glance, I thought this acquisition made much sense — SATS/WFS deal would push the combined companies to become a global cargo handling player.
In fact, SATS would eventually diversify revenues across Asia, Europe, the Middle East and Africa, and North America.
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Source: SATS/WFS Prospectus 3 Jan 2023
Yet SATS shares have fallen more than 30%.
And even after the deal was approved last week, shares were still stuck in the bargain bin.
If the SATS/WFS deal had so much growth potential, why is the market still undervaluing its SATS shares?
And more importantly, will SATS still pay a dividend ever again?
WFS — struggling profits?
I went deeper into the SATS/WFS prospectus…
WFS profits soared over the last two years. But that’s not what surprised me....