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John Menzies/DX in distribution sale talks

The logistics and parcel carrier plans to buy Menzies' distribution business by the summer
April 6, 2017

John Menzies (MNZS) may be getting rid of an albatross from around its neck. Management is in discussions with DX Group (DX.) to sell its underperforming distribution business. Menzies shares closed trading up 7 per cent on the day of the announcement.

IC TIP: Hold at 668p

DX will pay for the deal through a combination of £60m in cash and the issue of new shares, equivalent to 80 per cent of the newly-enlarged group's share capital. Upon completion existing Menzies shareholders will hold at least 75 per cent of the enlarged DX, with current DX shareholders having 20 per cent and 5 per cent directly held by John Menzies' pension scheme. Annual cost synergies of between £8m and £12m are expected from the deal.