DCC may have £700m to spend on ac­qui­si­tions

The Irish Times - Business - - BUSINESS NEWS - JOE BREN­NAN and MARK PAUL

Donal Mur­phy, the new chief ex­ec­u­tive of fu­els-to-tech con­glom­er­ate DCC, said it is on course for a “record” year of spend on ac­qui­si­tions, as an­a­lysts pre­dict it could have a fur­ther £700 mil­lion to de­ploy over the next 18 months.

Mr Mur­phy was speak­ing af­ter FTSE 100-listed DCC re­ported in­terim op­er­at­ing profit up 14.4 per cent in the six months to the end of Septem­ber, driven by its rapidly-ex­pand­ing liq­ue­fied petroleum gas (LPG) busi­ness. To­tal spend on deals in the cur­rent fi­nan­cial year, based on deals al­ready an­nounced, will amount to £550 mil­lion, the com­pany said yes­ter­day.

Ac­qui­si­tions warch­est

“On con­ser­va­tive as­sump­tions, we think the group has the ca­pac­ity to de­ploy at least an ad­di­tional £700 mil­lion on [merg­ers & ac­qui­si­tions] out to March 2019,” said Davy stock­bro­kers. Mr Mur­phy would not di­rectly en­dorse Davy’s pre­dic­tion of its ac­qui­si­tions warch­est, but he con­firmed it has “plenty of cap­i­tal” and is look­ing to buy up other LPG op­er­a­tors in the US, as well as also hunt­ing ac­qui­si­tions for its health­care and tech­nol­ogy di­vi­sions.

The group agreed in April to buy oil gi­ant Shell’s LPG busi­ness in Hong Kong and Ma­cau for about £120 mil­lion, mark­ing its first foray out­side of Europe.

Last month, it com­pleted the £235 mil­lion pur­chase of Esso’s re­tail petrol sta­tion net­work in Nor­way, while it struck a deal last week to ac­quire US-based LPG com­pany Re­tail West for $200 mil­lion (€171.6 mil­lion).

“Our strat­egy has been con­sis­tent to, nad we have been clear that we will build out our LPG busi­ness on a global ba­sis,” said Mr Mur­phy.

‘De­ploy cap­i­tal’

“The US mar­ket is frag­mented, and we will roll up smaller and some big­ger op­er­a­tors there over time. In Asia, we want to learn build out our busi­ness, but learn first. We are also keen to de­ploy cap­i­tal in our health­care and tech busi­nesses. We’re com­mit­ted to di­ver­sity.”

The Dublin-based com­pany’s first-half op­er­at­ing profit, ex­clud­ing ex­cep­tional items and a waste busi­ness that was sold in May, rose to £122.5 mil­lion (€137.5 mil­lion) from £107.1 mil­lion for the com­pa­ra­ble pe­riod last year, it said in a state­ment yes­ter­day.

Mr Mur­phy re­it­er­ated that the group ex­pects its full fi­nan­cial year to the end of March “will be an­other year of profit growth and de­vel­op­ment.”

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