Menzies merger firm DX probed by police

UPDATE 2 — Courier firm DX Group, currently in the process of acquiring the distribution business of John Menzies in a reverse takeover, said on Friday it was notified by the City of London Police Economic Crime Directorate of an allegation that has been made against the company.

It said the allegation “has resulted in the commencement of a preliminary investigation centred on the DX Exchange operations.”

DX Exchange is a document exchange service for law firms.

The investigation is at a very early stage.

“The Board of DX received the details of the allegation on 7 June 2017 and is co-operating fully with the City of London Police,” said DX.

“A further announcement will be made when appropriate.”

Edinburgh-based John Menzies said it was “considering its position and will make a further announcement as and when appropriate.”

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

On June 5, DX Group announced revised terms for its agreement to acquire the distribution business of Menzies in a reverse takeover — finally winning the support of DX’s largest shareholder.

Gatemore Capital Management, which owns 21.3% of DX, had opposed the original deal proposal but said on June 5 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 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.