Investor urges John Menzies to consider splitting up

* Lakestreet Capital says company "dramatically undervalued"

* Says in talks to improve revenue, margins

* Shares (Berlin: DI6.BE - news) 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 (LSE: MNZS.L - news) has called on the Scottish company to consider splitting up, believing its distribution and aviation services businesses would be worth more apart.

Swiss investment firm Lakestreet Capital Partners' move is the latest example of shareholder activism in Europe, coming on the heels of investors in UBS (NYSEArca: FBGX - news) , Alliance Trust and DMG (Shenzhen: 002143.SZ - news) Mori Seiki seeking spin-offs or board changes.

Shares in John Menzies rose 6 percent after Lakestreet's announcement on Thursday, putting the stock among the top gainers in London. The company's shares have lost almost half their value since the start of 2014.

John Menzies said it would not be making any comment on Lakestreet's statement.

Kabouter Management, John Menzies' largest shareholder with a 9 percent stake, said the company's structure of operating in two unrelated sectors "contributes significantly to the undervaluation of John Menzies' stock today".

The United States-based investor added it is constructive to have healthy dialogue that questions whether John Menzies is taking the right steps and is exploring all options to unlock additional value.

Lakestreet, a top 10 investor with a stake of about 3 percent, first bought John Menzies shares in 2014. It said talks are ongoing with the company's management to improve revenue performance and margins.

Lakestreet considers itself an active investor and targets companies it believes are undervalued but have strong long-term growth potential. Its investment strategy includes engaging with company management.

John Menzies started as a chain of newsagents and was the Scottish agent for the monthly instalments of Charles Dickens' first novel, "The Pickwick Papers".

The company has been trying to expand its aviation support business, which includes cargo and baggage handling and brings in most of its profit, as dwindling demand has stymied growth at the newspaper and magazine distribution operation.

The company said in November that the loss of some British Airways business at London's Heathrow airport, as well as contract losses in Colombia, would hurt results at its aviation services unit this year.

Lakestreet said on Thursday that if the two units were valued on a standalone basis, the enterprise value (equity plus debt) of John Menzies could be about 525 million pounds ($811 million).

John Menzies has an enterprise value of 334.7 million pounds, according to Thomson Reuters StarMine data.

None of the company's five biggest shareholders made immediate comment on the matter.

Lakestreet said talks with the management are expected to continue ahead of the company's annual shareholder meeting on May 15.

John Menzies shares were up 7.6 percent at 383.5 pence at Thursday's close. ($1 = 0.6474 pounds) (Writing by Roshni Menon; Editing by Mark Potter and David Goodman)