THE new owner of Menzies Distribution has highlighted the potential of the firm as the former parent company said its decision to focus on aviation services would pay off.

Edinburgh-based John Menzies completed the £74.5 million sale of the distribution operation to the Endless private equity firm yesterday in a deal that severed its historic links with the news trade.

The 185-year-old John Menzies decided it could achieve better returns from the provision of support services for airlines than in the road-based distribution business.

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Menzies Distribution’s core business is transporting newspapers and magazines to retailers. It has faced challenges amid changes in the print market.

However, Endless partner Aidan Robson said: “Menzies Distribution represents Endless’ largest investment to date and is a hugely exciting acquisition.”

He said Endless looked forward to working with the management team led by Greg Michael to deliver their shared vision for the business, which will remain based in Edinburgh.

On its website Endless says it opens up opportunities that other investors can’t. Its portfolio includes the Arran Aromatics scents to candles business.

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Mr Michael said as an independent firm Menzies Distribution would be in control of its own destiny and free to invest to fulfil the ambitious growth and diversification plans for the business.

The distribution business has diversified in recent years into activities such as the provision of delivery services for online retailers, in which it sees good prospects.The new services help the firm increase the utilisation of its huge fleet of vehicles.

Menzies Distribution noted its core business remains strategic partnering with publishers to provide a sustainable route to market for their product.

The company distributes over seven million newspapers and magazines each day from 56 sites in the UK and Ireland. It can capitalise on moves by publishers to try to increase efficiency.

Mr Michael noted the firm recently won a contract to collect and deliver all daily and regional weekly newspapers printed by the former Trinity Mirror, which recently rebranded as Reach.

But directors of the former parent group, John Menzies plc, reaffirmed their belief that they had done the right thing by selling off the distribution arm.

The decision followed repeated calls for a break up of the group from investors who argued that the aviation and distribution businesses did not belong together.

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Group corporate affairs director John Geddes said the distribution division was a good business. However John Menzies could not provide the investment required to fulfil its potential while offering appropriate support for the aviation division, This has a “massive market to go after”.

Menzies is the second biggest independent operator behind Swissport but still has a relatively small share of a market that is worth around $60 billion a year currently.

The market is expected to grow rapidly amid increased out-sourcing by established players and growth in the number of low cost airlines.

Directors felt they had got a fair price for the distribution business. The sale should allow John Menzies to achieve a higher rating for its shares as a pure play aviation support firm.

Mr Geddes said the severing of the group’s historic links with newspaper distribution stirred emotions. However, he noted: “Distribution isn’t being taken over by a rival. It’s still going to exist in its own right and I think it’s going to do very well.”

Reflecting on his 21 years at John Menzies, Mr Geddes said: “It’s been quite an interesting ride.”

The group stayed in the distribution business after selling the newsagent chain that bore its name in 1998 and its Early Learning Centre toy shops three years later.

The sale of the distribution business was approved by 97.4 per cent of votes cast by John Menzies shareholders at a general meeting last month.

The Endless deal provided a conclusion to a long process which was fraught with complication.

John Menzies lined up a merger of the business with DX but scrapped the plan in August last year after a profit warning issued by the Slough-based firm made the cash and shares deal the firms had agreed less appealing.

In November John Menzies appointed Rothschild investment bank to look at ways of separating the distribution and aviation divisions.