City police investigate parcel firm DX Group

DX ‘co-operating fully’ with probe as John Menzies board ‘considers its position’

DX Group, the parcels business that is planning to merge with the distribution arm of Edinburgh-based John Menzies, is being investigated by the City of London Police.

The company said in a statement that it had been notified that an allegation has been made against the company “which has resulted in the commencement of a preliminary investigation centred on the DX Exchange operations”.

Dxexchangeisthefirm’sprivate document delivery service, described as a “private club” that serves more 25,000 clients. It handles documents such as contracts, deeds, property settlements and financial agreements.

DX Group said yesterday: “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.”

Newspaper distributor and baggage handler John Menzies said its board was “considering its position and will make a further announcement as and when appropriate”. Earlier this week, a major investor in DX gave its backing to revised terms for the firm’s reverse takeover by Menzies Distribution, which employs about 3,500 people.

Gatemore Capital Management, which controls 21.3 per cent of DX, had previously voiced its opposition to the deal, arguing that it had appeared to be a “bad deal for DX shareholders”.

But managing partner Liad Meidar said the revised agreement – which will see DX investors own 35 per cent of its enlarged share capital, rather than the 20 per cent previously proposed – “significantly improves the terms of this deal for all shareholders”.

Menzies, which recently acquired US aviation services firm ASIG in a “transformational” deal worth $202 million (about £158m), had been under investor pressure to consider a break-up of its business before agreeing the planned tie-up with DX.

Under the revised terms of the deal, DX is set to acquire Menzies Distribution on a debt-free basis for £40m in cash, down from the £60m previously proposed, and issue new DX shares representing 65 per cent – rather than 75 per cent – of its issued share capital.

Alongside the planned transaction, which will see about 17 per cent of John Menzies’ defined benefit pension scheme transfer to the enlarged group, Menzies aims to raise some £30m through a shares placing, primarily to institutional investors.

gareth.mackie@scotsman.com