Revised Menzies-DX deal wins over big shareholder

UK courier firm DX Group on Monday announced revised terms for its agreement to acquire the distribution business of John Menzies in a reverse takeover — winning the support of DX’s largest shareholder.

Gatemore Capital Management, which owns 21.3% of DX, opposed the original deal proposal but said it would vote in favor of the revised agreement.

“The reduced debt load on the combined company, with a much-improved equity split, better reflects the inherent value in DX Group and will provide the company with a much healthier financial footing going forward,” said Gatemore managing partner Liad Meidar.

Under the revised proposal, DX has offered £40 million in cash “and the issue of new DX ordinary shares representing 65% of DX’s issued share capital as enlarged by the transaction.”

Current DX shareholders would therefore own 35% of DX’s enlarged issued share capital.

The original terms had proposed that DX pay about £60 million and issue new shares to Menzies equaling 80% of DX’s share capital.

Menzies has long been under pressure from some of its shareholders to separate its airport and distribution businesses.

Menzies said that alongside the transaction it intends to raise £30 million via a cash placing of new John Menzies shares primarily to institutional investors “the proceeds of which would be retained by John Menzies post completion of the transaction.”

Bob Holt, chairman of DX, and Dermot Smurfit, chairman of John Menzies, said in a joint statement: “We are pleased to have reached this agreement and believe that the revised terms of the proposed transaction represent an attractive opportunity for all stakeholders of both companies.”