JOHN Menzies is mounting a push for growth in the logistics markets in Ireland after taking control of a newspaper distribution business in a €3.6 million (£3.1m) deal.
The deal comes as Edinburgh-based Menzies faces complications in its efforts to merge its expanding distribution division with DX Group.
Activist investor Gatemore Capital Management last week renewed its attack on the planned merger which it reckons undervalues DX.
Menzies has acquired a 50 per cent stake in EM News Distribution from Irish retailer Eason taking its holding to 100 per cent.
The acquisition reflects directors’ belief in the potential for Menzies to achieve growth in Eire and Northern Ireland by following the kind of diversification strategy it has pursued in Britain.
Menzies has been targeting logistics markets such as internet sales fulfilment amid the challenges it faces in the core newspaper and magazine distribution trade. Volumes have been under pressure following a fall in sales of the print editions of some titles.
By offering a wider range of services, Menzies can achieve a higher utilisation rate for the vans it uses to distribute papers at night.
Paul McCourt, finance director of Menzies Distribution, said the deal would allow Menzies to bring its full expertise to bear on serving the newstrade sector in the areas EM serves.
He added: “It also provides us with a similar platform to explore new logistics services in Northern Ireland and the Republic of Ireland, similar to the approach we have been taking across Scotland, England and Wales.”
EM operates a fleet of 200 vans and has depots on both sides of the border. The venture had turnover of more than £100m in 2016 and was profitable.
The 193 operations staff members who work for EM will join Menzies Distribution, which has 3,500 employees.
Menzies and Eason formed the venture in 2007.
The deal under discussion with DX would allow Menzies to address longstanding calls by critics for the group to separate its distribution and aviation support businesses.
However, Gatemore says DX directors should significantly improve the terms of the proposed reverse takeover of Menzies distribution or end talks about it.
The investment firm revealed last week that it had increased its holding in DX Group to 21 per cent from 11 per cent.
In March, Menzies and Slough-based DX said they were in talks about a combination that had strong strategic logic for all stakeholders.
Menzies's corporate affairs director John Geddes noted then that the rationale for keeping the distribution and aviation support businesses under the ownership of one group had become less obvious in recent years.
He said the aviation arm could prosper without needing the cash generated by the distribution arm.
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