Published On: Tue, Aug 15th, 2017

John Menzies scraps plans to merge with DX Group

The two companies looked set for a tie-up which would see DX pay £40million and its investors owning 35 per cent of the combined group. 

Menzies wanted the terms changed after scrutinising DX’s finances after the latter’s trading update last month, but the two sides could not come to an agreement. 

Both had initially talked up the “strong strategic logic” for joining forces when talks were announced in March. 

DX had been rocked by a profit warning the previous month which sent its shares plunging by over 60 per cent, while Menzies had faced pressure from investors to spin off its newspaper and magazine delivery business in order to focus on aviation services. 

In a further twist, DX faced a police probe into its DX Exchange document delivery service for legal firms and the public sector, but police subsequently decided not to open a full investigation. 

Menzies said: “Notwithstanding the strong strategic and commercial benefits which would arise from a combination, and despite further discussions with DX the John Menzies board does not believe it is currently possible to agree a revised set of terms with DX for the combination which would be in the interests of John Menzies shareholders. Menzies has therefore terminated discussions with DX.” 

It sees “strategic merit” in separating “at the appropriate time” its aviation and distribution divisions into two independent businesses. 

DX announced the departures of chief executive Petar Cvetkovic and finance director Daljit Basi in an overhaul of the business last month. 

Talks on new financing options and strengthening its board are underway. DX chairman Bob Holt, who will retire after overseeing the changes, said: “As we were unable to agree suitable terms with John Menzies, we believe a standalone strategy is the right course for our shareholders and we are on the front foot with plans for business transformation and recovery.” 

DX’s biggest shareholder Gatemore Capital Management, with 21.3 per cent, said: “We are excited about the prospects for DX as a standalone company, especially under the leadership of the new board.”

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