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DX Group and Menzies in division merger talks
  • 31 Mar 17
title

DX Group and Menzies in division merger talks

  • 429 views
James Valentine

Digital editor at Research Tree

 
Menzies Van
Strap line

Under investor pressure, Menzies has decided to hive off distribution business and sell to DX

Companies: DX Group, John Menzies


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Shares in John Menzies rose 10% early on Friday after the Scottish firm told investors that it was in talks with logistics company DX Group (+3%) to sell its distribution division following calls by shareholders to separate it from the aviation division. 


The Boards of the two companies said they believed the deal had strong strategic logic for all stakeholders and represented an opportunity to deliver value to all shareholders.


"The boards of DX and John Menzies believe that the combination would benefit the customers of DX and Menzies Distribution through the creation of a logistics and parcel carrier of enhanced scale and capability operating through a 24 hour UK wide logistics network."

The move is estimated to generate cost synergies of around £8-£12m per year, with DX paying £60m in cash for the business, funded by new borrowings of the enlarged Group.


Menzies has a defined benefit pension scheme, and an estimated 17% of that would transfer to DX, whilst Menzies' pension scheme would receive 5% of the issued share capital of the enlarged company.


Menzies had been under pressure from shareholders to renew and revamp its business after investors criticized operations following several warnings and a string of departures of top executives. Shareholder Value Management, an activist investor, acquired 7% of Menzies last year and urged the company to break up its two divisions.


Zeus Capital, which is advising DX Group on the merger, said the proposed transaction would see DX acquire Menzies for £60m in cash and the issue of new DX ordinary shares representing 80% of DX’s issued share capital. The firm added that after the difficulties the firm has faced this year, confirmation that Company will hit FY17 estimates "is welcome".


"Further positive news comes in the form of the pipeline that is the strongest it has been for some time at c. £30m."





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The information contained within this post is based on personal experience and opinion and should not be considered as a recommendation to trade nor financial advice.

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Morning Note – 28 November 2019

Companies: DSCV AGY RCN CIN DX/

finnCap

AIMing for income

Companies: BVXP BOTB ITQ SHOE CGS DX/ HSP JIL IBEX PRP CAML GTC JIM CCAP ENTU FXI NAH ASY HGM PEN PEG AVG NXR

Hybridan

DX Group (DX) FY19 webcast October 2019

Companies: DX Group

piworld.co.uk

Renewal season increases confidence in FY16 profitability

Companies: DX Group

Zeus Capital

Well on the road to recovery

Companies: DX Group

finnCap
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