Monday, June 5, 2017

Parcel Delivery and Logistics Companies Merger Goes Ahead After Revised Offer

DX and Menzies Distribution Tie Up as Gatemore Agrees One Third Cut in Price
Shipping News Feature
UK – The wrangling over the future of John Menzies Distribution appears to have reached a settlement with investor Gatemore Capital agreeing to new terms with the DX Group enabling a reverse merger between the parcel delivery and logistics companies following a one third discount from 60 to 40 million pounds, which is the figure DX will need to pay, and with a revised share percentage of the new organisation. Gatemore owns 21.3% of DX whose shareholders in turn will now hold 35% of the enlarged group as against just 20% as originally proposed. Liad Meidar, CIO and Managing Partner at Gatemore Capital Management, said:

“We were pleased to have been able to work productively with both the DX and Menzies boards to come to an outcome that significantly improves the terms of this deal for all shareholders. 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 (irregular dimension and weight) 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.”

There has been bad blood between stockholders of DX since the company was hit with the latest profit warning in February with Liad Meidar demanding that senior figures step down, including DX chairman Bob Holt, CEO Petar Cvetkovic and Non-Executive Director, Paul Murray. The rift has been caused by the pressure on the market with Deutsche Post’s purchase of UK Mail (formerly Business Post) last December and Amazon’s decision to oust UPS and organise its own deliveries using bought in individual courier services.

DX Chairman Bob Holt and Menzies Chairman Dermot Smurfit said in a statement they believed the revised terms of the proposed transaction represent an attractive opportunity for all stakeholders of both companies and estimated the deal would generate estimated annual cost benefits of about £10 million, plus the enlarged new company would be able to reinstate a regular dividend on completion of the transaction, taking into account the leverage, earnings growth and investment requirements of the business.