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(Reuters) - UK mail delivery firm DX Group is under preliminary investigation by the London police after an allegation was made against it relating to its collection and delivery service DX Exchange, it said on Friday.
The company, which is preparing to buy John Menzies' distribution arm, said its board had received the details of the allegation on June 7 and was co-operating fully with the City of London Police Economic Crime Directorate.
"The investigation is at a very early stage," DX said in a brief statement, without giving any details of what the allegation against it was.
A spokeswoman for DX declined to comment further.
DX traces its origins to the legal sector and even today its DX Exchange members' network supplies the majority of the top legal firms within the UK.
The service, which can be used to correspond with 25,000 members across the UK and Republic of Ireland, also caters to central and local government, banks and building societies, estate agents and accountants, among others.
The news comes as DX is set to put to vote its planned reverse takeover of Menzies distribution arm, after securing the backing of its largest investor Gatemore Capital Management earlier this month with revised deal terms.
The deal is aimed at bolstering DX, which issued a warning in February and is one of several big operators in the crowded parcels market, where DHL-owner Deutsche Post has bulked up by buying UK Mail and Amazon has started its own deliveries.
Under the deal, Menzies investors will get 60 percent of the issued shares in the enlarged firm. DX shareholders will receive 35 percent, and the rest will go to the John Menzies pension fund.
If the deal closes, Menzies' distribution managing director Greg Michael will become DX chief executive and distribution finance director Paul McCourt will become DX chief financial officer.
Menzies said on Friday that its board was considering its position after noting DX's announcement.
Its stock was down 2.7 percent at 705.5 pence at 0711 GMT.
Reporting by Esha Vaish in Bengaluru; editing by Jason Neely