DCC eyes further buyouts after €464 million French deal

DCC is eyeing further European acquisitions after agreeing a €464 million deal with Shell to buy Butagaz, a leading liquefied petroleum gas business (LPG) in France.

The deal is the biggest in DCC’s history, as the company continues to chase a variety of assets being sold off by downsizing oil majors. The London-listed, Irish headquartered company surged to the top of the FTSE following the deal, its shares rising almost 13 per cent.

"We don't have anything specific of the size [of the Butagaz] coming anytime soon, but we definitely think there are more assets on the way," said Tommy Breen, DCC's chief executive.

He confirmed that DCC is still hunting assets in the LPG, fuel retailing and heatring oil distribution sectors. “We will have much bigger businesses in all of those segments in a few years time,” he said.

Mr Breen said that, large opportunistic deals such as Butagaz aside, DCC has about £150 million to spend annually on deals. It is dfue to close a deal this summer to buy a network of unmanned fuel stations from Esso.

“We will be driven by the opportiunities as they arise. The majors get certainty from us, because they know that we have no issues with funding,” he said.

The company also announced a 5 per cent share placing to help fund the Butagaz deal.

In its annual results announcement for the year to the end of March on Tuesday DCC said pre-tax profits rose by 8.1 per cent to £163.3m at DCC, as it targets “very significant” growth for the year ahead.

The group’s energy division was hit by falling oil prices, pushing group revenues down by 4 per cent to £10.6 billion.However, there was still profit growth achieved in each of DCC‘s four divisions.

In energy, volumes increased by 5.7 per cent over the prior year, but the oil price slumped pushed the division’s revenue down by 7.5 per cent.

Operating profit in DCC Environmental was 13.2 per cent ahead of the prior year, “as the recovery in the business continued in Britain and Ireland” DCC said.

“DCC remains ambitious to continue the growth and development of its business. The group’s strategy has always included maintaining a strong and liquid balance sheet to leave it well placed to take advantage of opportunities as they arise,” said Mr Breen.

“The funds raised from this placing will ensure the Group retains financial capacity for further development while preserving the balance sheet strength that has served it well over many years,” Mr Breen said.

Looking to 2016, Mr Breen said that the group anticipates that “both operating profit and adjusted earnings per share from continuing activities will be very significantly ahead of the prior year.”

DCC proposed a 10 per cent increase in its final dividend, to give a total full year dividend of 84.54 pence per share, an increase of 10 per cent over the prior year.