John Menzies scraps merger with DX

LOGISTICS company John Menzies has walked away from a planned merger after concerns about the strength of trading at its takeover target, DX.

The pair announced a merger between DX and John Menzies’ distribution division in March but the terms were redrawn in June after activist Gatemore, which owns more than a fifth of DX, rallied other investors to try to derail the deal in a shareholder vote.

Under those revised terms, DX was to spend £40m on the merger rather than £60m, and own 35pc of the joint entity, rather than the originally proposed 20pc.

However, John Menzies torpedoed the deal yesterday after scrutinising the DX business again following a trading update last month from DX. John Menzies said that, despite holding further talks, an agreement could not be reached.

The DX board said while it believed the proposed combination had “strong strategic logic” it would remain a stand-alone business. Bob Holt, chairman of DX, will retire once he has overseen the changes to the board that had been demanded by Gatemore.

The activist had proposed Ron Series as chairman, as well as three non-executive directors. Gatemore had criticised the proposed deal as soon as it emerged in March, claiming that it was an expensive strategy that was not in the best interests of DX shareholders.

DX said its shares would remain suspended, even though investors have not been able to trade them since March 30, when the Menzies distribution deal was announced.