Activist investor Gatemore Capital Management has upped its stake in Aim-listed logistics firm DX Group to 21 per cent amid its opposition to DX’s prospective reverse takeover of John Menzies’ distribution arm.
Including its own boosted stake, Gatemore says it has the public support of 28 per cent of shares in DX, regarding opposition to the Menzies deal.
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Gatemore increased its stake in DX after securing shares in a private sale.
Liad Meidar, chief investment officer and managing partner at Gatemore Capital Management, said: "We believe in the long-term value of DX as a stand-alone business."
It has leading positions in document exchange, secure delivery and IDW freight. DX would be better off focusing on fixing its freight business, rather than pursuing an ill-conceived deal which grossly undervalues the company.
Meidar added: “From the perspective of Menzies, we understand why they are looking to unload their distribution business. But as DX shareholders, we are not interested in having our shareholdings diluted by 80 per cent and taking on additional indebtedness and pension liabilities in order to acquire a declining business. We are confident a majority of shares will be voted against this deal at an emergency general meeting.”
The announcement comes after public letters issued to the DX board demanding changes to fuel improvement, with Gatemore saying the current board has presided over a 90 per cent slump in share value.
Shares have been suspended since the end of March when the two firms entered into talks over the prospective deal.
The proposed deal with Menzies, would, Gatemore says, dramatically undervalue DX Group shares and result in stakeholders’ shares being diluted.
The deal was reported in March with the companies expecting the transaction to be completed in the summer.
Earlier this month, DX’s chairman Bob Holt said the firm has listened to all shareholders and continues to believe that a potential combination of DX with John Menzies’ distribution division offers “strong benefits”.
He has also noted that all shareholders will have the opportunity to vote on any proposal put forward.
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