Scottish firm John Menzies said it was in talks to sell its distribution business to British mail delivery firm DX Group, responding to calls by top investors to separate the unit from its airport services business.
DX Group proposed to pay ￡60 million (US$74.8 million) in cash and new ordinary shares, which would represent 80 percent of DX’s issued share capital after the deal closes, the companies said in a statement yesterday.
John Menzies’s shares rose as much as 11.2 percent to ￡7.06 on the London Stock Exchange, touching their highest since November 2013.
The company has been under pressure to revamp its business as a string of warnings and departures of top executives drew criticism from three investors who advocated separating its aviation services and print media distribution units.
Activist investor Shareholder Value Management (SVM) took a 7 percent stake in Menzies last year and urged the company to break up its businesses. saying they would be worth more if split.
John Menzies has been aiming to expand the aviation support business, which provides cargo and baggage handling and freight forwarding services, and brings in most of its profits, as its once core newspaper and magazine distribution business continues to dip.
The merger deal will see Greg Michael, managing director of John Menzies’ distribution unit, take over as the chief executive of DX Group, and Paul McCourt, the unit’s finance director, become DX Group’s chief financial officer.
The companies said the deal would constitute a reverse takeover by DX and its ordinary shares are expected to be suspended from trading on London’s Alternative Investment Market, effective yesterday.
The deal would generate cost synergies of between ￡8 million and ￡12 million each year and be completed in the summer, they said.
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