£40m DX merger deal scrapped after talks
A £40 million merger between the distribution arm of John Menzies and DX Group, which has two depots employing more than 500 at Willenhall, has been scrapped.
It follows a profit warning by parcel delivery and logistics firm DX earlier this year in which it cautioned over "challenging" trading conditions, and a management overhaul last month.
The firms had been in discussions about DX acquiring John Menzies' distribution unit for £40 million, announced in June.
But John Menzies said in a stock market announcement today that, following additional due diligence on DX Group following a July trading update, it "became apparent" that any deal would require revised terms.
For that reason, despite "strong strategic and commercial benefits" which would arise from a tie-up, the deal has been "terminated".
John Menzies said: "Despite further discussions with DX following the DX announcement of 14 July 2017, the John Menzies board does not believe it is currently possible to agree a revised set of terms with DX for the combination which would be in the interests of John Menzies shareholders.
"John Menzies has therefore terminated discussions with DX."
The DX Board said it had been unable to agree suitable terms and it was in the best interests of DX shareholders to proceed with business transformation on a stand-alone basis.
DX expects to announce its full year results in late September and trading in the company's shares remains suspended pending further notification.
Bob Holt, chairman of DX, said: "Our discussions with John Menzies have been constructive and the proposed combination of DX and John Menzies' distribution division was potentially highly attractive to both sets of shareholders. However, it has become clear that we would not be able to agree terms that would be acceptable to our shareholders and since we have a strong alternative business transformation plan in place, we have decided that it is the best interests of our shareholders for us to pursue this course.
The announcement also comes just over a month after City of London Police dropped plans for a probe into DX Group.
John Menzies said it continues to believe there is merit in separating its aviation and distribution divisions into two independent businesses at the "appropriate time".
DX recently failed in an attempt to secure planning permission for a new £36m super-hub at Essington.
This would have provided a new home for its existing operations and created 150 new jobs, but South Staffordshire councillors voted against the scheme following fierce opposition from local people.
DX has since said it is looking for an alternative site, which could see it move from Willenhall to Rugby or Coventry.
