Mail, courier, and logistics firm DX and aviation and distribution support services group John Menzies agreed in late March for DX to buy John Menzies' Distribution division in a reverse takeover comprising GBP60.0 million in cash and the issue of new shares representing 80% of DX's enlarged share capital.
Menzies Distribution represents one of two divisions within John Menzies, the other being Menzies Aviation, and DX said at the time John Menzies would own around 80% of the company after the merger.
In June, the pair then agreed on a lower takeover price comprising GBP40.0 million in cash and the issue of new shares representing 65% of DX's enlarged share capital, giving John Menzies 60% of the enlarged group.
The revised deal followed criticism over the terms of the sale from DX's largest shareholder Gatemore Capital Management LLP, which holds 21% of the company's shares. Gatemore had previously labelled the first deal as "ill-conceived" and "negotiated from a position of weakness", but gave support to the merger after the terms were revised.
Shortly after this, DX revealed it was being investigated by police after an allegation was made against the company in relation to its DX Exchange operations.
DX Exchange is the company's service that enables the transfer of documents between firms, banks, courts and other parties in legal matters all within a secure and trusted network.
In July, however, it was revealed that the police would not proceed with a full investigation, leading John Menzies to reconfirm its support for the merger having previously said it would "consider its options" when the investigation was first announced.
Now on Monday, John Menzies has said that following further financial due diligence after DX's trading update in mid-July, it "became apparent" that the combination would be required to be effected on revised terms to those agreed in June. ■
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