H.I.G. Capital reaches agreement to acquire DX Group for £314.8 million

H.I.G. Capital reaches agreement to acquire DX Group

LONDON, UK: Transit Bidco Limited, an indirectly wholly-owned subsidiary of funds advised or managed by H.I.G. Capital LLC reached agreement on the terms of a recommended cash acquisition to acquire DX Capital Group, according to a notice.

Under the terms, each DX shareholders will be entitled to receive 48.5 pence/share valuing DX’s entire issued and to be issued share capital at approximately £314.8 million.

Tobias Borkowski, Managing Director of H.I.G., said:  “We are delighted to be announcing this recommended cash acquisition of DX. DX has long established itself as a leading provider of specialist delivery services in the UK, supported by a strong management team, diligent workforce and well-invested infrastructure. We look forward to partnering with the DX management team in accelerating DX’s next phase of growth.”

The acquisition value represents a premium of approximately 32.9 per cent to the closing price per DX share of 36.5 pence on 8 September 2023 (being the last business day prior to the date of the commencement of the offer period).

The acquisition presents H.I.G. Capital with the opportunity to enter new markets. H.I.G. has a strong track record in the business services and logistics sectors deploying capital and expertise into growth-oriented businesses and supporting their management teams in achieving their strategic ambitions.

H.I.G. has considerable capital resources and deep industry-specific knowledge, allowing it to support driving the next phase of growth for DX.

The DX Group Directors, who have been so advised by Moelis as to the financial terms of the Acquisition, consider the terms of the Acquisition to be fair and reasonable. In providing its advice to the DX Directors, Moelis has taken into account the commercial assessments of the DX Directors.

DX is a well-established provider of a wide range of delivery services to both business and residential addresses across the UK and Ireland. First established in 1975 as a Document Exchange service to the legal sector, DX provides a wide range of overnight delivery services, as well as logistics services.

Mark Hammond, Chair of DX, said: “Since the introduction of its turnaround plan in 2018, DX has demonstrated a strong track record in sales growth, profitability, and margin improvement. This progress has been most recently evidenced in our latest full year results which recorded the highest revenue in our 48-year history.

Furthermore, in addition to our strong financial and operational performance, in the last eighteen months, the Board has successfully settled its claim in relation to Tuffnells, resolved its internal corporate governance inquiry, achieved the re-admittance of its shares to trading, and deepened the bench of executive and non-executive talent. Viewed in conjunction with its turnaround and financial momentum, DX is a company reinvigorated and ready for the next phase of growth.

Nonetheless, the Board recognises the challenges that companies of DX’s size and shareholder structure face in raising further capital for expansion or acquisitions and the challenges that major shareholders have in crystallising value for their holdings. Furthermore, DX is dependent on UK demand growth across its operating sectors, and thus exposed to potential economic and global investment sentiment headwinds.

The offer from Bidco recognises the value of the platform that has been built, offers shareholders an opportunity to crystallise an attractive value for their holdings and provides DX with an excellent partner for the next stage of its development.”

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