* Lakestreet Capital says company "dramatically undervalued"
* Says in talks to improve revenue, margins
* Shares up 7.6 pct (Adds comment by Kabouter Management, updates shares)
By Aastha Agnihotri and Esha Vaish
April 30 (Reuters) - An investor in John Menzies has called on the Scottish company to consider splitting up,believing its distribution and aviation services businesseswould be worth more apart.
Swiss investment firm Lakestreet Capital Partners' move isthe latest example of shareholder activism in Europe, coming onthe heels of investors in UBS, Alliance Trust and DMGMori Seiki seeking spin-offs or board changes.
Shares in John Menzies rose 6 percent after Lakestreet'sannouncement on Thursday, putting the stock among the topgainers in London. The company's shares have lost almost halftheir value since the start of 2014.
John Menzies said it would not be making any comment onLakestreet's statement.
Kabouter Management, John Menzies' largest shareholder witha 9 percent stake, said the company's structure of operating intwo unrelated sectors "contributes significantly to theundervaluation of John Menzies' stock today".
The United States-based investor added it is constructive tohave healthy dialogue that questions whether John Menzies istaking the right steps and is exploring all options to unlockadditional value.
Lakestreet, a top 10 investor with a stake of about 3percent, first bought John Menzies shares in 2014. It said talksare ongoing with the company's management to improve revenueperformance and margins.
Lakestreet considers itself an active investor and targetscompanies it believes are undervalued but have strong long-termgrowth potential. Its investment strategy includes engaging withcompany management.
John Menzies started as a chain of newsagents and was theScottish agent for the monthly instalments of Charles Dickens'first novel, "The Pickwick Papers".
The company has been trying to expand its aviation supportbusiness, which includes cargo and baggage handling and bringsin most of its profit, as dwindling demand has stymied growth atthe newspaper and magazine distribution operation.
The company said in November that the loss of some BritishAirways business at London's Heathrow airport, as wellas contract losses in Colombia, would hurt results at itsaviation services unit this year.
Lakestreet said on Thursday that if the two units werevalued on a standalone basis, the enterprise value (equity plusdebt) of John Menzies could be about 525 million pounds ($811million).
John Menzies has an enterprise value of 334.7 millionpounds, according to Thomson Reuters StarMine data.
None of the company's five biggest shareholders madeimmediate comment on the matter.
Lakestreet said talks with the management are expected tocontinue ahead of the company's annual shareholder meeting onMay 15.
John Menzies shares were up 7.6 percent at 383.5 pence atThursday's close.($1 = 0.6474 pounds) (Writing by Roshni Menon; Editing by Mark Potter and DavidGoodman)
