DCC to buy BP's liquified natural gas business for €50m
DCC IS buying oil giant BP’s liquified natural gas (lpg) distribution business in Britain in a €50 million deal.
Dublin-listed DCC said yesterday it had agreed to buy BP’s lpg distribution business for €51.3 million in cash. The sale is due to be completed next month.
The BP unit had net tangible operating assets of about €38 million on December 31st, its last balance sheet date.
The company distributes 87,000 tonnes of lpg, either in bulk or cylinders, to industrial, commercial and domestic customers in Britain.
DCC said its new acquisition would complement its existing British lpg business, Flogas, which has sales of 190,000 tonnes.
The two divisions will be merged when the deal is complete.
DCC’s chief executive, Tommy Breen, said the deal would cement the Irish group’s position as the leading oil and lpg sales and distribution business in Britain.
Mr Breen also pointed out that DCC has a good track record in taking over distribution businesses from oil majors, many of which want to move out of such operations and focus on production.
Two weeks ago, Britain’s competition watchdog cleared DCC’s purchase of what was French multi-national Total’s oil distribution business in Britain.
DCC agreed to buy the assets from Rontec Investments last September in a deal worth €67 million.
The assets include home heating oil distribution business Total Butler, the share capital of Total’s oil distribution as well as its retail service station businesses on the Isle of Man and the Channel Islands.
DCC Energy is the largest of the group’s five businesses and accounted for €7.8 billion of its €10.7 billion revenues in its last financial year, which ended on March 31st.
DCC Energy’s operating profits fell 39 per cent to €85.5 million during the year.
The fall in profitability was down to a combination of high oil prices and a mild winter in its main markets, Ireland and Britain, which in turn hit demand for its products.
The division’s main focus is on the sale and distribution of home heating oil.
In a statement last month, the group said that the division benefited from more favourable conditions in the first quarter of its current financial year, which began on April 1st.
At the end of July, Britain’s Office of Fair Trading told one of the division’s main subsidiaries, GB Oils, to end a practice whereby customers could be quoted one price when they ordered oil but charged a higher price when it was delivered.
The company gave the office a legally binding commitment that it would change its terms and conditions to ensure that prices quoted at order remained fixed until delivery.
In the three months since the beginning of April, DCC spent €25 million on a series of acquisitions, a figure that included deferred payments.
It bought Medical Gas Solutions in April, Dutch unified communications business Go Telecom in May, and Vitamex Manufacturing, which provides product development, registration, manufacturing and packing services, in June.
DCC has four other divisions, including Sercom, which distributes electronic equipment, as well as an environmental services business, food and drink distributor and healthcare products specialist.