DX Group and Menzies call off talks
The Board of DX Group has announced that the negotiations with John Menzies regarding the potential merger between DX and the Menzies Distribution division have been called off. In a statement issued this morning (14 August), DX Group said that while “the proposed combination had strong strategic logic for all stakeholders”, they had been “unable to agree suitable terms”.
DX Board therefore decided to continue with its plans for “business transformation on a stand-alone basis”.
“This approach has the support of both DX’s major shareholder and its bankers, with discussions on new financing options for DX already underway,” said the DX Group statement.
The “major shareholder” is Gatemore Capital Management, which owns 21.3% of DX Group and this morning issued its own statement welcoming the news that DX Group was moving forward with its standalone plans.
As previously reported, Gatemore had called for new personnel to be brought onto the DX Board and the investor told Post&Parcel this morning that it had “secured the support of DX Group’s board to appoint four highly-experienced members who have a track record in effecting remarkable turnarounds in the logistics sector”.
The four new proposed board members are: Ron Series, who is proposed as Chairman designate; and Paul Goodson, Russell Black and Lloyd Dunn, who are proposed as Non-executive Directors.
The DX Board said that its Chairman Bob Holt “will be leading these changes after which he intends to retire from the Company”.
Liad Meidar, CIO and Managing Partner at Gatemore Capital Management, said: “We are excited about the prospects for DX as a stand-alone company, especially under the leadership of the new board. Each of the four new directors brings significant sector experience. Ron Series and Lloyd Dunn can in fact be directly credited with the remarkable turnaround of Tuffnells, DX’s main competitor in freight.
“We appreciate Bob Holt’s stewardship of the Company throughout a challenging period and believe that the board arrived at the right conclusion with the Menzies transaction. We strongly believe that with leading positions in document exchange, secure delivery and IDW freight, DX is well positioned to thrive on a stand-alone basis.
“We stand firmly behind the new team and are confident they will achieve tremendous success at DX.”
For its part, John Menzies issued a statement in which it said: “Notwithstanding the strong strategic and commercial benefits which would arise from a combination of Menzies Distribution and DX, and despite further discussions with DX following the DX announcement of 14 July 2017, 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. John Menzies has therefore terminated discussions with DX.”
John Menzies added that it “remains confident in the quality of the Menzies Distribution business, the strength of its operations and its future prospects”, and it “continues to believe there is strategic merit in and potential shareholder value to be created by separating, at the appropriate time, its Aviation and Distribution divisions into two strategically focussed and independent businesses”.
