Menzies tie-up partner DX Group probed by City police

DX Exchange handles documents such as contracts, deeds and financial agreements. Picture: Corbis

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DX Group, the parcels business that is planning to merge with the distribution arm of Edinburgh-based John Menzies, is being probed by the City of London Police.

In a statement to the stock market, the group said it has been notified by the force that an allegation has been made against the company “which has resulted in the commencement of a preliminary investigation centred on the DX Exchange operations”.

DX Exchange is the firm’s private document delivery service, described as a “private club” that serves more 25,000 clients across the UK and Ireland. It handles documents such as contracts, deeds, property settlements, financial agreements and barrister’s briefs.

The group said: “The investigation is at a very early stage. The board of DX received the details of the allegation on 7 June 2017 and is co-operating fully with the City of London Police.”

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Earlier this week, a major investor in DX gave its backing to revised terms for the firm’s reverse takeover by Menzies Distribution.

Gatemore Capital Management, which controls 21.3 per cent of DX, had previously voiced its opposition to the deal, arguing that it had appeared to be a “bad deal for DX shareholders”. But managing partner Liad Meidar said the revised agreement – which will see DX investors own 35 per cent of its enlarged share capital, rather than the 20 per cent previously proposed – “significantly improves the terms of this deal for all shareholders”.

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In response to today’s announcement by DX, Menzies said its board was “considering its position and will make a further announcement as and when appropriate”.

Newspaper distributor and baggage handler Menzies, which recently acquired US aviation services firm ASIG in a “transformational” deal worth $202m (£158m), had been under investor pressure to consider a break-up of its business before agreeing the planned tie-up with DX.

Under the revised terms of the deal, DX is set to acquire Menzies Distribution on a debt-free basis for £40 million in cash, down from the £60m previously proposed, and issue new DX shares representing 65 per cent – rather than 75 per cent – of its issued share capital.

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