DX trucks

As it prepares to list on AIM this week, DX Group has said that it will not begin its plans to integrate DX Freight, formerly Nightfreight, into its wider network until the business is operating at acceptable levels of efficiency.

In its  AIM admission document seen by The Hub, DX revealed that it acquired Nightfreight for an “attractive valuation”. It bought the company in March 2012 for £11.6m.

It also hopes to push ahead with plans to close several sites and consolidate by bringing several services into one site.

A spokeswoman for DX was unable to disclose which sites are likely to be affected, but CEO Petar Cvetkovic last year told MT that this will not be a case of closing former Nightfreight sites and moving operations to DX ones.

Parcels market analyst Frank Proud at Apex Insight said its decision to list on the stock market signals that DX has already achieved a good turnaround of the business.

He hinted that recent acquisitions and mergers in the sector have not been quite as successful as the Nightfreight one, but becoming a listed company is likely to challenge DX further.

“As a listed entity, DX will face certain structural challenges in continuing to grow its business and gain market share,” Proud said.

“Its main parcels business, DX Freight, has a greater weighting to the large and heavy parcels that were Nightfreight’s speciality.  As well as being likely to have lower exposure to growth from home shopping, these require more manual handling and hence appear to offer less potential for productivity gains than smaller boxes,” he added.

Proud also said that DX’s decision to sell its Business Direct locker operation to ByBox in November “will have made the business simpler for new investors to understand”.

Once bitten...

This is not the first time that DX has been listed on the stock exchange. It floated at a value of around £200m in 2004, prior to its takeover by private equity firm Candover Investments in 2005.

Candover expects to receive £3.4m in proceeds from the flotation later this week, and will exit fully from its involvement with the company.

Proud said he believed the float comes at the right time for DX, especially as rival mail carrier Royal Mail saw its share price rise dramatically shortly after its flotation last year.

The Hub will be watching DX’s share price closely when it begins trading on AIM tomorrow (27 February).