- DX (Group) and John Menzies are in talks regarding a potential combination of the former company and the latter's Menzies Distribution division.

Directors at both companies believed the combination had strong strategic logic for all stakeholders and represented an opportunity to deliver significant value to both companies' shareholders.

They foresaw such a tie-up creating a logistics and parcel carrier of enhanced scale and capability operating through a 24-hour, UK wide logistics network.

Based on a preliminary joint assessment, the boards of DX and John Menzies estimated the possible combination would generate cost synergies in the range of £8m-£12m a year.

It was presently envisaged that a deal would be effected by DX acquiring Menzies Distribution for consideration, on a cash and debt free basis, comprising £60m in cash and the issue of new DX ordinary shares representing 80% of DX's issued share capital as enlarged by the deal.

The cash consideration would be satisfied by new borrowings by the enlarged group.

As part of such a transaction, it was proposed that about 17% of John Menzies' defined benefit pension scheme would transfer to the enlarged group.

John Menzies' pension scheme would receive new DX shares amounting to up to 5% of DX's issued share capital as enlarged by the transaction as part of the transfer arrangements agreed with the John Menzies pension trustees.

It was intended the balance of the new DX shares would be issued by DX to John Menzies' shareholders pro rata to their holdings of shares in John Menzies at the relevant date.

On this basis, current DX shareholders would own, in aggregate, 20% of DX's issued share capital, John Menzies shareholders would own, in aggregate, at least 75% of DX's issued share capital and up to 5% of DX's issued share capital would be owned directly by John Menzies' pension scheme.

Directors of DX and John Menzies anticipated the deal would be completed during the summer of 2017. Talks were ongoing and there could be no certainty that a transaction would occur.

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