John Menzies pulls plug on DX Group deal after turmoil

Deliveries group John Menzies on Monday scrapped plans to sell its distribution division to DX Group after chaos engulfed the struggling buyer.

The two sides inked a complex cash-and-shares deal in March but a DX profit warning and a shake-up of its top team, plus a short-lived police investigation into DX, prompted Menzies to call time on it.

It said the tie-up was not “in the interests” of shareholders.

The deal, unveiled in March, had already shown signs of strain in June when DX cut the cash payment to Menzies from £60 million to £40 million amid investors fears it was overpaying. A share offer giving Menzies 80% of shares in DX was also cut to 65%.

Further talks to change the terms again following DX’s troubles hit the buffers, prompting Menzies to pull the plug on the deal. However, the board said it was still planning to hive off its distribution business to focus on its primary aviation division.

DX has suffered a litany of woes since agreeing to buy the unit, last month warning annual earnings would be flat due to an “exceptionally challenging year”.

The City of London Police also opened a criminal investigation, which it later closed, into one of DX’s delivery units, triggering questions over the stewardship of the firm.

A management overhaul has seen chief executive Petar Cvetkovic and finance chief Daljit Basi leave, while chairman Bob Holt also announced his retirement today.