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Holding raised to 21%

Activist adds to stake in Menzies target

Menzies websiteGatemore Capital Management, the UK-headquartered activist investor, has acquired a further 10% stake in Menzies partner target DX Group, increasing its overall holding in the company to 21%.

This transaction follows a letter that Gatemore and other shareholders sent to DX’s board on 4 May opposing the proposed reverse takeover of the company by Menzies’s Distribution.

DX Group’s shares have been suspended from public trading since the company’s board announced that they were in talks with Menzies on 31 March following poor performance that has seen the company shed over 90% of its value.

Gatemore and the other signatories argued that DX Freight’s operating margins could be improved to yield a share price between 35p and 75p.

Third party analysis of the Menzies-DX merger suggests that any deal would only value DX shares at 14p to 16p.

Liad Meidar, CIO and managing partner at Gatemore Capital Management, said: “We believe in the long-term value of DX as a stand-alone business. It has leading positions in document exchange, secure delivery and IDW freight.

“DX would be better off focusing on fixing its freight business, rather than pursuing an ill-conceived deal which grossly undervalues the company.

“From the perspective of Menzies, we understand why they are looking to unload their distribution business.

“But as DX shareholders, we are not interested in having our shareholdings diluted by 80% and taking on additional indebtedness and pension liabilities in order to acquire a declining business. We are confident a majority of shares will be voted against this deal at an EGM.”

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