DCC has a €1.1bn war chest for more acquisitions

Firm announces acquisition of Stampede in US and Kondor in UK for combined €125

DCC chief executive Donal Murphy (left) said the acquisitions “significantly strengthen” the company. Photograph: Eric Luke

DCC chief executive Donal Murphy (left) said the acquisitions “significantly strengthen” the company. Photograph: Eric Luke

 

Dublin-based distributor DCC could do more deals this year to follow two acquisitions announced on Friday, according to chief executive Donal Murphy.

Ahead of DCC’s annual general meeting in Dublin, the group said its technology division had acquired equipment distributors Stampede in the US and Kondor in the UK, in deals with a combined value of £110 million sterling (€125 million).

Speaking after the agm, Mr Murphy indicated it was likely that DCC would buy further businesses this year.

“We have plenty of capital to deploy on acquisitions, there is about £1 billion (€1.1 billion) sitting on our balance sheet,” he said.

Mr Murphy pointed out that the London-listed distributor of fuel, technology and healthcare products, spent £670 million (€759 million) on purchasing rivals in its last financial year, which ended on March 31st.

Stampede distributes professional audio-visual products to system integrators, resellers, retailers and etailers in the US, Canada and UK.

It recorded revenue of $280 million (€240 million)in the year ended December 31st, 2017 and employs about 210 people.

Stampede represents DCC Technology’s first acquisition in North America and is consistent with the division’s strategy of expanding into new countries, and adding to its professional audio-visual operation’s products.

Kondor distributes mobile devices and accessories. It had turnover of £110 million in the year ended December 31st, 2017 and employs about 250 people.

Acquisitions

“The acquisition of Kondor strengthens DCC Technology’s position as one of the leading omni-channel distribution and supply chain businesses in Europe, ” the Irish group said.

DCC expects the acquisitions to generate a return on capital employed of about 15 per cent in the first full year of ownership.

The company issued an interim management statement saying profits were well ahead of last year, driven by completed acquisitions.

For the year ending March 31st, 2019, DCC’s profits are significantly weighted towards the second half of its financial year.

“At what is still a very early stage in the financial year, the group reiterates its belief that the year will be another year of profit growth and development,” it told investors.

DCC has grown substantially in recent years and now has significant operations across 17 countries, with “market-leading positions” in each of its liquefied petroleum gas, retail and oil, healthcare and technology divisions.

Mr Murphy said the acquisitions “significantly strengthen” the company. “The acquisition of Stampede significantly strengthens DCC Technology’s position in the attractive and growing Pro AV market and also provides DCC Technology with a platform for growth and development in North America,” he said.

“The acquisition of Kondor further enhances both DCC Technology’s service proposition and its market position, where it has grown to be a leading service provider to the retail channel in Europe.”