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Menzies bows to break-up pressure with news sale

8:57 pm, 25th July 2018

Sky News has learnt that John Menzies has struck a deal with Endless, the turnaround investor, to offload Menzies Distribution for a price close to £70m.

The deal, which has been demanded by a number of John Menzies shareholders such as Lakestreet Capital Partners for more than three years,‎ is likely to be announced to the London Stock Exchange by Friday.

It will put under Endless’s ownership a business which delivers more than 7m newspapers and magazines every day, with its network of drivers covering more than 135,000 miles in each 24-hour period.

The price expected to be paid by Endless represents a multiple of less than three times‎ last year’s profits for Menzies Distribution, but reflects the prospects of a declining industry as print newspaper circulations decline.

Its sale will leave John Menzies as a pure-play aviation group, which provides services such as cargo-handling, ground-handling and fuelling to customers.

Investors have argued for some time that focusing on aviation will lead to a re-rating of John Menzies’ shares, which have fallen by more than 14% during the last 12 months.

Last August, the company abandoned a proposed cash-and-shares deal to sell its distribution business to‎ DX Group, which has also been targeted by an activist investor, Gatemore Capital Management.

Updating the stock market in May, John Menzies ‎said the auction of Menzies Distribution was “in progress, [but] this process is taking longer than we anticipated”.

It was unclear whether the company’s leading shareholders would welcome the price struck with Endless, which has a strong track record at improving the fortunes of many of the companies it acquires.

The sale of Menzies Distribution has been run by Rothschild, the investment bank.

A spokesman for John Menzies declined to comment on Wednesday evening, while Endless could not be reached for comment.