DX Group’s largest shareholder has slammed the proposed acquisition of John Menzies Distribution, deeming it a bad deal for shareholders, an attempt to distract from “terrible” operating results and a “face saving exercise for the DX board”.
The proposed deal, announced this morning, would see DX Group buy the distribution arm of Menzies for a cash consideration of £60m and the release of new DX shares.
Trading of DX shares ceased at 7.30am until the deal is either confirmed or abandoned.
Gatemore Capital Management holds 11% of DX shares. Managing partner Liad Meidar said the timing of the announcement seemed like “an attempt to distract from terrible operating results” the group announced this morning.
He said: “On the surface, the proposed combination of DX Group and John Menzies’ Distribution division looks like a bad deal for DX shareholders and a face-saving exercise for the DX board. We are highly suspicious about the timing of the announcement and the board’s motivations around it.
“It seems like an egregious case of the board front-running the extraordinary general meeting and force-feeding a deal that is not in the best interest of shareholders.”
Mediar said DX’s recent contract with Avon UK, worth in excess of £10m a year, was not enough to make up for lost ground in the business as it “falls under its lower margin logistics unit”.
“The announcements today make it clearer than ever that it is time for a new board to take over,” Meidar said.
Last week, Gatemore called for the removal of Bob Holt and Paul Murray from the DX board for their “inexcusable” performance, following news that the share price of DX Group had fallen by 90% in the last two years.
John Menzies Distribution revealed its intention to hive off its distribution business last year.
