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Menzies agrees deal for Orbital

John Menzies shares rose by 4% yesterday after it announced a £13 million acquisition for its traditional print distribution business.

Menzies Distribution is buying Orbital Marketing Services, a portfolio of logistics and marketing services businesses serving the travel, tourism, education, charity, publishing and healthcare sectors.

The 40-year-old company employs more than 550 staff at nine locations across the UK.

Last year Orbital reported an operating profit of £2.2m and gross assets of £13.5m.

The group said: "Like Menzies Distribution, Orbital is a cash generative business and the acquisition will be earnings enhancing in the year to December 31, 2013." Shares jumped 22p to 595p.

Orbital is 51% owned by BP Direct Mail and 49% by Rydlings, whose shareholders comprise the existing management team which will remain with the firm.

Menzies will pay £7.7m now and a further £5.9m at the end of 2014.

The group said: "Further consideration, up to a maximum of £6.3m, may be payable only if exceptionally high levels of profit performance were to be achieved by December 2014. It added the acquisition was "highly synergistic".

Iain Napier, chairman of John Menzies, said: "This acquisition allows us to expand our printed media distribution footprint while taking a large stride into adjacent growth areas."

Earlier this month, Menzies reported a £25m increase in banking headroom, with finance director Paul Dollman signalling targets for both its aviation and distribution arms.

Mr Napier said: "This acquisition allows Menzies Distribution to grow by enlarging its printed media distribution capabilities and opening up new markets."

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