JOHN Menzies has outlined its confidence that its distribution arm’s proposed reverse takeover of DX Group will complete in the summer, in spite of strong opposition to the deal from shareholders in the Slough-based logistic company.

Since announcing plans for DX to acquire Menzies Distribution for £60 million in return for issuing 80 per cent of the enlarged share capital to Menzies, the deal has faced opposition from activist DX investor Gatemore Capital, which has called for Menzies offer better terms.

Gatemore holds 11 per cent of AIM-listed DX, but has found the backing of a further seven per cent of shareholders and claimed a further 20 per cent have expressed discontent with the deal.

Speaking after Menzies’ annual meeting, chairman Dermot Smurfit said: “All the indications are that the vast majority of the shareholders of DX want this deal to happen. We know we have one activist who is agitating but our belief is that the vast majority will vote for the deal as we have outlined it.”

Such is Menzies’ confidence in getting the deal over the line, Mr Smurfit said the board was close to deciding on the name of the new company.

He also confirmed the group was in the process of dividing its corporate office, adding that the new distribution business would be a Scottish company.

It has previously been announced that Menzies Distribution’s Greg Michael will become chief executive of the new business while Paul McCourt will become finance chief, and DX finance director Daljit Basi will take an executive position.

And Mr Smurfit said four non-executive directors were in the process of being recruited.

The DX deal marks the end of an internal review at Menzies after demands from some investors to separate its distribution and aviation businesses. Mr Smurfit was appointed in July 2016 and said his observations of activity led him to believe splitting the company was “absolutely the right thing to do”.

“At my first board meetings it was very plain to me that 90 per cent [of the discussion] was aviation and 10 per cent was distribution. The two businesses didn’t fit together at all so it made much more sense to say these should be two independent businesses.”

Mr Smurfit said Menzies’ $202m (£155m) deal to acquire Florida-based airplane refuelling business ASIG, and the subsequent revenue this will add to its aviation division, had no bearing on the separation.

He said he was pleased with the growth shown in the aviation business, which was 12 per cent for the first four months of the year on a constant currency basis.

Menzies said that momentum in new contracts has continued over the last four months with notable wins across each region. In the UK, contracts have been secured with Cathay Pacific and Jet2 and in the Americas with Virgin America and Frontier.

In addition, a joint venture with Oman Air is due to start early in the second half of the year at nine airports across Oman.

Trading within ASIG was in line with expectations. Menzies said integration plans are on track, with anticipated synergies being realised.

“We have already achieved £5m of the indicated synergies, and we’ve just had a review and it’s nothing but good news,” said Mr Smurfit, adding, “the opportunities that exist to cross sell our new product lines and also to expand into new markets are very exciting.”

Mr Smurfit said the group had plans for global expansion. “There are unbelievable, numerous opportunities, but you don’t want to build on marshy ground,” he said. “You want to build on hard bedrock, so the view we’re taking at the moment is that we’re not going to be doing anything huge in the next 12 months until we are absolutely sure ASIG has been integrated properly and is delivering all of the projections we have made from our internal side, then we’ll think ‘what’s next?’.”

Ahead of the split, Menzies Distribution is performing in line with expectations.

Overall sales declined 3.1 per cent against the same four-month period last year, broadly in line with the internal forecasts, although the rate of decline within the magazine market was described as sharper than expected.

Within this, the group’s retail logistics arm on April 1 commenced a contract with NHS Scotland to distribute stock to hospitals throughout the country.