John Menzies and DX terminate merger plan

Edinburgh-based John Menzies said on Monday it terminated the merger talks between its distribution business and courier firm DX Group.

“Notwithstanding the strong strategic and commercial benefits which would arise from a combination of Menzies Distribution and 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,” said Menzies.

“John Menzies has therefore terminated discussions with DX.

The John Menzies board 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.

“The John Menzies board remains confident in the quality of the Menzies Distribution business, the strength of its operations and its future prospects.”

John Menzies group will announce its interim results for the six months ended June 30, 2017, on Tuesday.

DX Group said: “While the respective boards believed that the proposed combination had strong strategic logic for all stakeholders, the DX Board has been unable to agree suitable terms.

“As a result, it believes it to be in the best interests of DX shareholders to proceed with 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.

“As part of business transformation, the company intends to make a number of changes to strengthen the composition of its board and is in advanced discussions with individuals regarding potential new appointments.

“These individuals are Ron Series, who is proposed as chairman designate, Paul Goodson, Russell Black and Lloyd Dunn, who are proposed as non-executive directors.

“Bob Holt, chairman, will be leading these changes after which he intends to retire from the company.

“A further announcement regarding board changes will be made in due course.”

DX chairman Bob Holt said: “Our discussions with John Menzies have been constructive and the proposed combination of DX and John Menzies’ Distribution division was potentially highly attractive to both sets of shareholders.

“However, it has become clear that we would not be able to agree terms that would be acceptable to our shareholders and since we have a strong alternative business transformation plan in place, we have decided that it is the best interests of our shareholders for us to pursue this course.

“Our major shareholder and our bankers are supportive of the proposed plans for the business on a stand-alone basis and we have been exploring new financing options with our bankers …

“As we were unable to agree suitable terms with John Menzies, we believe a stand-alone strategy is the right course for our shareholders and we are on the front foot with plans for business transformation and recovery.”