John Menzies PLC (LON:MNZS) saw its shares jump on Thursday after the firm unveiled plans to focus on its aviation services business as it agreed to sell its newspaper distribution business to private equity firm Endless LLP.
The £74.5mln disposal to funds managed by Endless comes after long-time pressure from top investors to sell off the business.
Menzies top shareholders Kabouter Management LLC, Shareholder Value Management and Laskestreet have called for a split up of the company’s two businesses since 2015.
The deal also comes nearly a year after the collapse of a proposed merger between Menzies and mail delivery company DX Group PLC (LON:DX.), with the two sides unable to agree terms.
The media business, which distributes over 7mln newspapers and magazines every day, accounted for about a third of the company’s total underlying profit in 2017.
The group said it will retain a 10% equity stake in the newspaper distribution division, with that business to be responsible for the funding of Section B of the Menzies defined benefit pension scheme.
New boss appointed
The company also announced that Forsyth Black, currently president and managing director of Menzies Aviation, will be appointed as its chief executive officer upon completion of the disposal.
Commenting on current trading, the firm said, Menzies Aviation continues to trade positively and is on track to deliver full-year expectations.
Dermot F Smurfit, chairman of John Menzies PLC, commented: "I am delighted to announce today the sale of Menzies Distribution. In doing so we create a pure play aviation services business that operates in a structural growth market and is very well placed to take advantage of the many exciting opportunities that exist.”
The firm said its current intention is to at least maintain the interim and full year dividend in line with last year, and going forward it will look to maintain a progressive dividend policy with dividend cover between two and three times.
In early afternoon trading, John Menzies’ were 7.7% higher at 645p.