DX tweaks deal with John Menzies to win backing from activist investor Gatemore Capital Management

Rebecca Smith
John Menzies is am airport services and logistics firm
John Menzies is am airport services and logistics firm

Activist investor Gatemore Capital Management has given the nod to revised terms for the proposed merger between DX and John Menzies' distribution division, after threatening to derail the takeover.

Under the tweaked terms, DX will acquire the division for consideration, on a cash and debt free basis, comprising £40m in cash and the issue of new DX ordinary shares representing 65 per cent of DX's issued share capital.

Read more: Activist investor ups stake in DX amid row over deal with John Menzies

The original plan, announced in March, was for DX to pay £60m in cash, along with the issue of new shares representing 75 per cent of its issued share capital.

Liad Meidar, chief investment officer and managing partner at Gatemore Capital Management, said: “The reduced debt load on the combined company, with a much-improved equity split, better reflects the inherent value in DX Group and will provide the company with a much healthier financial footing going forward.

We continue to believe in the long-term value of DX Group as a stand-alone business due to its leading position in document exchange, secure delivery and IDW freight.

We believe that shareholders will be pleased by the revised terms that have been agreed upon, which is why we have agreed in turn to vote in favour of the transaction.

Last month, Gatemore Capital Management announced it had increased its stake in Aim-listed logistics firm DX to 21 per cent, saying it had the public support of 28 per cent of shares in DX regarding its opposition to the Menzies deal.

Gatemore had been a vocal critic of the prospective deal, saying shareholders were 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".

In a joint statement today, Bob Holt, chairman of DX, and Dermot Smurfit, chairman of John Menzies, said: “We are pleased to have reached this agreement and believe that the revised terms of the proposed transaction represent an attractive opportunity for all stakeholders of both companies.”

The deal is expected to be completed during this summer.

Read more: DX hitches up with John Menzies

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