More upheaval at Menzies merger target DX

Courier firm DX Group, currently in the process of merging with the distribution business of Edinburgh-based John Menzies, said it will split its business into two divisions — and that its CEO and finance director will leave the firm.

It was not immediately clear what impact this will have on its plan to merge with Menzies’ distribution business.

Restructuring consultant James Hayward has been appointed interim chief financial officer of DX but the firm made no mention of any plan to fill the CEO role, leading some analysts to suggest Menzies would fill the post if the merger deal goes through. 

Menzies said in response: “The board of John Menzies plc notes the announcement made this morning by DX (Group) plc.

“John Menzies will continue to work with DX to establish the impact, if any, of DX’s announcement on the proposed combination of DX and John Menzies’ Distribution division.

“John Menzies will make a further announcement as and when appropriate.”

The departures are just the latest in a series of headlines made by DX, which said on July 7 that the City of London Police “will not be proceeding to a full investigation” of DX.

In its latest announcement, DX said it it will create two divisions — DX Express and DX Freight. 

“DX Express will comprise the DX Exchange, DX Secure, the Courier operations and Mail activities while DX Freight will comprise Logistics, DX 1-Man, and DX 2-Man,” said DX.

“DX Express will be headed by Nick Cullen, DX’s existing Chief Operations Officer and DX Freight by Stuart Godman, who is currently Chief Commercial Officer.”

DX said CEO Petar Cvetkovic and finance director Daljit Basi will leave the company.

James Hayward’s appointment as interim CFO is a non-board appointment.

“James has spent over 20 years working as an independent restructuring and transformation specialist and has been directly involved with over 40 companies at the board level, both as an executive and advisor in the quoted and private sector,” said DX.

In a trading update, DX also said results for the financial year ended June 30, 2017 are expected to show revenues of about £292 million and adjusted profit before tax (before exceptional items) in line with market forecasts.

“In an exceptionally challenging year, the company was pleased to successfully renew its contract with Her Majesty’s Passport Office as well as sign a number of notable contract wins, including with Avon,” said DX.

“Looking ahead, management has completed a review of the company’s expected performance in the new financial year and, taking into account the reorganisational changes referred to below, it now considers that earnings before interest tax, depreciation and amortisation will be broadly flat year-on-year.

“The company continues to enjoy the support of its bank.”

DX chairman Bob Holt said: “The changes we are making both to the board of directors and to the group’s operational structure are aimed at supporting business transformation. 

“In particular the reorganisation provides greater flexibility in managing costs and puts the company in a better position to advance its operational and sales performance and to provide an enhanced service to its customers.

“In a challenging year, we are pleased to have the support of our bank and remain firmly committed to acting in the best interests of all our shareholders.”