The deal that would have see DX Group acquire Menzies Distribution has been called off, and a new board of directors is set to be installed at DX under the guidance of its largest shareholder - Gatemore Capital Management.
Menzies backed out of its acquisition deal with DX Group after a trading update from the group made it clear DX would not be able to meet the terms of the agreement.
Also confirmed was the departure of DX CEO Petar Cvetkovic and the possible arrival of the four board members proposed by its largest shareholder earlier this year.
DX announced its intent to buy the distribution arm of John Menzies on in March, but kickback from its shareholders meant it was forced to negotiate a revised proposal, which was released on 5 June.
But Menzies said an update from DX this morning had prompted it to undertake "further financial due diligence" on DX Group, the result of which was that it it "became apparent to the John Menzies board that the combination would be required to be effected on revised terms from those that were jointly announced".
The proposal was that DX would acquire Menzies Distribution from John Menzies on a cash and debt free basis, but in exchange for consideration of £40m cash raised in new borrowings by the larger group and new DX shares representing 65% of its issued share capital post-acquisition.
Menzies said it didn't think it could negotiate new terms with DX, and had terminated talks with the group as a result.
DX Group chairman Bob Holt, who is expected to retire after overseeing a restructure at DX, said the group will instead focus on a standalone transformation.
"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," he said.
Business transformation
The transformation planned for DX includes four new board members, and splitting the business into two divisions: DX Express, and DX Freight.
The operator said it is in discussion with former Tuffnells chairman Ron Series to head up the DX board, as well as with NightFreight co-founders Lloyd Dunn and Russell Black and former Great Bear Distribution executive chairman Paul Goodson to join as non-executive directors.
The four men were originally proposed by Gatemore Capital Management back in March after shareholders experienced a 90% drop in value in three years.
Commenting on today's announcement, managing partner Liad Meidar said: "We are excited for the prospects for DX as a standalone company, especially under the leadership of the new board.
"We appreciate Bob Holt's stewardship of the company throughout a challenging period and believe the board arrived at the right conclusion with the Menzies transaction.
"We stand firmly behind the new team and are confident they will achieve tremendous success at DX."
