DCC’s shares soared to a four-year high on Wednesday morning as the former conglomerate confirmed it had received a cash bid from US private equity groups Energy Capital Partners and KKR.
It followed a report in specialist UK financial news blog Betaville, which focuses on market gossip on corporate deals.
Dublin-based, but London-listed DCC said in statement that it is evaluating the proposal together with its financial advisers in JP Morgan Cazenove and UBS and that a further announcement “will be made in due course”.
Shares in the group, which is led by chief executive Donal Murphy, jumped as much as 17.2 per cent in midmorning trading to £62.45, which valued the group at £5.35 billion (€6.2 billion).
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Energy Capital is a specialist investor in the energy transition, specialising in electricity and sustainable infrastructure. KKR is one of the most storied New York investment groups – set up in 1976, the same year that DCC was founded, by Kohlberg, Kravis and Roberts – that pioneered the debt-fuelled corporate buyout industry.
The approach follows years of underperformance by the stock relative to target prices set by analysts, leaving the company among the smallest on the FTSE 100 by market value earlier this year.
This prompted speculation at the time that it might be in danger of relegation from the prestigious index if stock market investors did not begin to appreciate its key energy business. Still, the stock rallied from its lows in February on the back of a robust trading update from the company.
“I think ultimately there will be a lot of shareholders who have been frustrated by the constant valuation discount on DCC shares while it’s been on the market,” said Berenberg analyst James Bayliss.
DCC, whose businesses once spanned Robert Roberts tea and coffee to waste management, decided in late 2024 to abandon its conglomerate routes by putting its then healthcare division on the market and signalling a strategic review of its technology unit that would also eventually lead to it being put up for sale.
Murphy and his team have long held that the energy business and related opportunity in energy transition presents the largest growth opportunity, at strong returns, available to the group.
While DCC makes much of its earnings from the sale of petrol and diesel through its network of about 1,175 petrol stations and sale of heating oil in Europe, it has been seeking for some time to position itself as a green transition play.
The group has pitched itself, in particular, as a consolidator in sectors such as liquid gas – widely considered the cleanest of the fossil fuels – on both sides of the Atlantic, and biofuels and solar panels in Europe.
DCC sold its healthcare unit a year ago to private equity fund-owned HealthCo Investment for an enterprise value of £1.05 billion. Its remaining technology unit is currently on the market.
Goodbody Stockbrokers analyst Kenneth Rumph said that there is “significant” upside potential in the share price, with the possibility of other bidders emerging – or DCC mounting a defence. This may lead to the market appreciating the energy business more, according to market observers.
