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DX Group under investigation by City of London Police

DX Group is being investigated by the City of London Police over an allegation relating to its exchange operations, casting a shadow over its proposed merger with John Menzies' distribution unit.

The investigation, being undertaken by City's Economic Crime Directorate, is at a "very early stage" and DX said it was "co-operating fully" with the probe.

"The board of DX announces that it has been notified by the City of London Police Economic Crime Directorate of an allegation that has been made against the company which has resulted in the commencement of a preliminary investigation centred on the DX exchange operations," the company said in a stock exchange announcement.

The logistics firm is in the midst of a £40 million merger with Menzies' distribution unit, but the Edinburgh company said that it is now "considering its position".

In a reactive statement Menzies said: "The board of John Menzies notes the announcement made this morning by DX.

"The board of John Menzies is considering its position and will make a further announcement as and when appropriate."

Shares in DX have been suspended since March, when news of the proposed tie-up was announced.

The deal had already come under pressure from activist investor Gatemore, which only dropped its opposition to the merger this week after the pair revised terms.

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