A £293m offer to buy DX Group by HIG European Capital has been given the thumbs up by the delivery group’s largest shareholder Gatemore Capital Management and former chief executive Lloyd Dunn, who also holds a substantial stake in the company, making the group’s sale all the more likely.

DX Group revealed the offer from US equity giant HIG European Capital’s offer yesterday (11 September) adding that, whilst it had previously rejected other offers from HIG to buy the business, it is prepared to recommend this latest proposal, if HIG decides to make it a firm offer. The US private equity firm now has until October 9 to make a firm offer or back away from a potential deal.

The likelihood of a sale was strengthened today (12 September) when Gatemore Capital Management and former CEO Lloyd Dunn announced they have both sent letters of intent to HIG confirming their support for this latest offer.

Gatemore holds 19% of the outstanding shares in DX Group and has been the largest shareholder in DX since 2017 when it led the rescue of the company with a £24m convertible note financing, saving over 3,000 jobs. This followed a public campaign by Gatemore to replace the board of directors, which ended with the appointment of Lloyd Dunn as CEO and three other independent board members.

Lloyd Dunn holds 12.6% of DX shares. Dunn left the company in September 2022, following a period of turmoil and shortly before the publication of the the findings of a corporate governance inquiry by DX’s audit and risk committee.

The inquiry found that DX management had failed to take sufficient disciplinary action against employees who had offered a bribe to staff at DX rival Tuffnells Parcel Express for confidential competitor information, and “curtailed” a probe into the bribery allegations.

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Following the report executive chairman Ron Series resigned in November after Gatemore called for him to be ousted, claiming his handling of the corporate governance inquiry had “severely harmed” perceptions by investors of the company, and accusing him of poor communication and a lack of transparency to shareholders.

In a statement issued today, Gartmore hailed DX’s “remarkable turnaround” which it said had transformed DX into the market leader in irregular dimension and weight (IDW) freight and seen it move from losing over £10m in EBIT per year to making over £30m in EBIT per year.

It added: “Revenues continue to grow at double digit rates, with healthy operating profits and a strong net cash position.”

DX Group’s position has also been strengthened by the demise of arch rival Tuffnells which went into administration in June this year and saw DX Group purchase 15 of its sites from Tuffnells’ administrators.

Shortly before its fall, Tuffnells and DX reached a confidential settlement, without any admission of liability, in relation to Tuffnells legal action against DX Group, in which it allleged corporate espionage.

Commenting on the proposed sale of DX to HIG, Liad Meidar, managing partner at Gatemore Capital Management said: “As has been announced, we are supportive of the possible offer for DX by HIG, which is a testament to the exceptional turnaround that DX has experienced since we invested in the business.

“We believe HIG is a credible backer for this company, which has built a market-leading position in
the UK and continues to deliver strong growth, going from strength to strength.”