DCC seals its biggest ever deal for €464m
Published 03/11/2015 | 02:30
Irish distribution company DCC has completed its acquisition of French business Butagaz from international giant Royal Dutch Shell for €464m.
The deal is the biggest in DCC's history and marks DCC's first entry into the French liquefied petroleum gas (LPG) market. Butagaz is the second-biggest operator in the sector there, with a 25pc market share.
In 2014, it generated underlying earnings before deductions of €123.6m and operating profits of €74.2m. Analysts at Davy stockbrokers expect that the acquisition will add between add £10m and £12m to DCC's forecast operating profit of £282m.
It received competition clearance at the beginning of September and has been consolidated in the results of the group from that date. The original agreement for the acquisition was announced by DCC in May.
DCC raised over €270m in a share placing when it announced the deal. The company issued 4.2m shares at a price of £47 (€65) per share, in part, to finance the acquisition of Butagaz.
The early closing of the deal was viewed favourably by analysts, with David O'Brien from Goodbody Stockbrokers saying: "The earlier than expected closing of Butagaz is an incremental positive. We are expecting group operating profits to grow by 8pc to £77m. However, the focus will be on how the more important second half has begun for the energy business."
The year to the end of March was a record 12 months for the firm in terms of business development with £554m committed to acquisitions, including the Butagaz deal.
The other major deal completed during the year was the acquisition of the French arm of oil and gas firm Esso.
DCC paid €106m for the network of nearly 400 Esso-branded petrol stations, including the Esso Express network and Esso motorway concessions. The deal, first announced in August last year, was finalised in June.
DCC is looking to grow all three of its core business areas of energy, technology and healthcare.
Tommy Breen, the chief executive of the London and Dublin-listed company, has previously said that the firm is aiming to spend around €150m a year on acquisitions across all of its business, but would consider spending more for the right deal.
DCC, whose activities range from oil distribution to waste management, made an operating profit of £222m (€311m) in its most recent financial year, with about 55pc coming from its energy business.
While more than two-thirds of profit is made in Britain and Ireland, the group has also moved into western Europe in recent years.