UK parcel delivery company DX is discussing a possible tie-up with the newspaper and magazine distribution arm of John Menzies.
A statement by John Menzies underlined the rationale behind the deal: “The boards of DX and John Menzies believe that the combination would benefit the customers of DX and Menzies Distribution through the creation of a logistics and parcel carrier of enhanced scale and capability operating through a 24 hour UK wide logistics network. Based on a preliminary joint assessment, the boards of DX and John Menzies estimate that the combination would generate cost synergies in the range of £8 million to £12 million per annum.”
The proposed transaction entails the acquisition of DX Menzies Distribution by DX on a cash and debt free basis, in a deal which would involve £60m in cash and the issue of new DX ordinary shares representing 80% of DX’s issued share capital. The cash consideration would be funded by new borrowing from the newly combined entity.
On completion of the deal, Greg Michael and Paul McCourt, currently Managing Director and Finance Director, respectively, of Menzies Distribution, would become Group Chief Executive Officer and Chief Financial Officer of DX. Daljit Basi, currently Finance Director of DX, would become an Executive Director.
The statement asserted that the management boards of the two companies expected the tie-up to be complete during summer 2017, though it also cautioned that “discussions are ongoing and there can be no certainty that a transaction will occur.”
Source: John Menzies
