The extraordinary general meeting called for by a DX Group shareholder has been cancelled after the delivery company announced its intention to buy Menzies Distribution.
Gatemore Capital Managemen called for the meeting last month to try and have Bob Holt and non-executive director Paul Murray removed from the board and replaced with four new candidates.
The move was prompted by a 90% fall in DX share price in the last two years, but Gatemore said it had withdrawn the request because the possible merger, proposed last week, had caused confusion around its purpose.
In a letter to the DX board, managing partner Liad Meidar said: “The untimely announcement of discussions between DX and John Menzies has fostered confusion over the purpose of the EGM.
“Our EGM proposals were brought to address the urgent need for effective leadership and to improve the governance standards of a suboptimal board structure.
“Our proposals were not designed to act as a referendum on an ill-conceived transaction that has been negotiated from a position of weakness.”
These include reservations about the declining sales of magazines and newspapers - Menzies Distribution’s core cargo – and creating “further [financial] uncertainty” by acquiring a “significant amount of pension liabilities”.
Meidar added that Gatemore believed it had enough shareholders onside to block the proposed merger.
DX chairman Bob Holt said: “The DX Board welcomes Gatemore’s withdrawal of its requisition notice, which was put forward after Gatemore was made aware of DX’s discussions with John Menzies.
"The Resolutions would undoubtedly have disrupted these discussions. The DX Board is advancing negotiations with John Menzies, which propose the combination of DX and Menzies Distribution, and remains highly committed to acting in the best interests of all shareholders.
“We will be making a further announcement in due course about these discussions and, in the meantime, continue to actively welcome constructive engagement with shareholders.”