DCC Energy chief executive Donal Murphy said he expects the vast majority of shareholders to support the sale of the group to two US private equity firms for up to £5.73 billion (€6.71 billion), despite being on collision course with some top investors resisting the deal.
The Dublin-based group confirmed on Monday it had agreed to sell itself to KKR and Energy Capital in a transaction that includes a £65.25-a-share upfront payment and as £1.25 extra per share if they achieve at least $800 million from a sale of the tech division, known as Nexora.
The bid consortium had included the payment of DCC’s final €1.47-a-share dividend on its earnings for last year in each of the multiple offers it tabled since late April.
The dividend was included in the statement on the agreed deal on Monday, even though it had actually been paid out last week. Murphy said that this was to allow the market to compare each offer from the time DCC rejected an initial €58-a-share bid.
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The proposal values the upfront cash offer at a 21.3 per cent premium to DCC’s closing share price in London – where it is listed – on April 28th, before it emerged that KKR and Energy Capital were circling the group.
“We believe the majority of shareholders will vote in favour of this,” Murphy told The Irish Times, adding that the board had “engaged very robustly” with the suitors over the past three months.
DCC is now one of three Irish public companies subject to takeover proposals. PTSB and Irish Continental Group (ICG) are also under offer.
Murphy, who has overseen a strategy to abandon DCC’s conglomerate roots to focus on energy, said that while the board “absolutely believes” that the remaining energy division is on course to double its operating profit to £830 million between 2022 and 2030, the target is “not without risk” when weighted against an uncertain geopolitical and macroeconomic backdrop as well as the need for the group to invest £1 billion-£1.2 billion.
“When the board looks at it and evaluates it in totality, we believe that this is very compelling from a shareholder perspective, and that’s why we recommended it,” Murphy said.
Five big shareholders – Fidelity International (FIL), DCC’s founder Jim Flavin, Aviva Investors, Marathon Asset Management and Ninety One – have signalled in recent times that they would not support an offer around the level tabled by the consortium. They own more than 15 per cent of the stock between them.
Alex Wright, portfolio manager at FIL, which owns 6.9 per cent of DCC, said on Monday that his position remains unchanged from earlier this month, when he said he would only entertain a bid of a least £70 a share. Flavin also said he would continue to campaign against a sale.
DCC, whose businesses once spanned Robert Roberts tea and coffee to waste management, decided in late 2024 to abandon the remaining elements of its conglomerate roots.
DCC sold its healthcare unit a year ago. It also offloaded part of its technology business, with the remainder of that division, known as Nexora, currently on the market and expected to be sold by the end of this year.
Murphy said that despite extensive engagement with the market and the strategic progress DCC has made in recent years, the FTSE 100 company had not enjoyed an expected valuation bump in the public market.
DCC, whose energy businesses span the operation of 1,173 petrol stations in Europe to distributing liquid gas on both sides of the Atlantic, and installing and maintaining solar PV and heat pump systems, had tweaked the narrative in efforts to secure a re-rating.
While it once put greater emphasis on how it fit into the environment, social and governance (ESG) agenda as a play on the energy transition, it had put more weight recently on security and affordability of fuel supply, according to analysts.
“The evidence has been that this transition is way, way, way slower than anyone anticipated. When we set out in 2022 with our strategy, we believed and the world believed that energy transition was going to happen very quickly. Energy transition is happening very slowly.”
Murphy said that DCC has had a challenge attracting new investors in recent times as they have preferred to wait for evidence of how the energy strategy will evolve.
DCC shares were up 1.2 per cent at £63.60 in late morning trading.
