DCC inks €106m deal to buy hundreds of French petrol stations
Published 29/08/2014 | 02:30
DCC boss Tommy Breen said the firm is "pretty ambitious" in its plans to secure a significant unmanned service station network across Europe.
The company said it has agreed to pay €106m to Esso for a petrol station chain in France - its single biggest ever acquisition.
Speaking to the Irish Independent, Mr Breen said that the acquisition - its first in France - gives DCC a 4pc share of the retail petrol station network in the country.
The acquisition, which he expects to be completed in the first half of 2015, sees DCC gain control of 274 Esso Express unmanned stations and 48 motorway concessions there. It will also secure existing Esso contracts to supply fuel to around 75 dealer-owned and dealer-operated sites.
DCC will also sign a long-term branded supply agreement with Esso's French unit.
The company said that Esso was the pioneer of the unmanned format for retail petrol stations in France. It converted its full-service network to the 'Express' format about 15 years ago.
Mr Breen said that France's hypermarket retail chains currently control about 60pc of the country's retail petrol station network.
"That's about as big as they're going to get because they won't penetrate all the rural markets," he said, adding that DCC will eye further penetration into the sector in France.
"There will be opportunities to do more. We would be hoping to expand that network in France organically and through potential acquisitions," he said.
The Esso business is expected to generate an initial return on invested capital of about 15pc. It generates about €2.2bn in annual revenue and sells about 1.9bn litres of fuel a year.
Once it completes the acquisition, DCC's Energy division will operate a total of 672 retail service stations in Europe and supply more than 2,000 dealer-owned service stations.
The purchase of the Esso business marks the second acquisition of an unmanned petrol station network by DCC.
In May it completed the £40m (€50m) acquisition of Sweden's Qstar, which operates 305 branded unmanned petrol stations across Sweden, but primarily in the less populated northern part of the country. Qstar is the fifth-biggest petrol station operator in Sweden.
Mr Breen said that more opportunities will emerge in Europe to buy other petrol station networks as oil majors continue their strategy of offloading downstream activities to focus on their core competencies.