DCC to acquire Shell Direct UK for €23m
DCC is to buy the business and assets of Shell Direct UK for a total of €23m, it announced yesterday.
Shell Direct supplies heating oils and transport fuels to domestic and commercial customers in Britain, and its acquisition consolidates it as a leading independent player in the market. The business will operate as a Shell-branded distributor trading as Emo Oil. It has 36 depots across Britain and employs about 500 people.
The business has sales of about 600 million litres a year, which would give a turnover of €300m at current energy prices, DCC said.
DCC is expecting the business to be “modestly profitable” in its first full year of ownership and to improve thereafter.
In 2001 it bought a similar business from BP in Scotland and claims to be the largest independent oil marketing and distribution business in Britain. DCC boss Jim Flavin said the latest deal leaves the company well-placed to make further bolt-on acquisitions in the sector.
This latest deal is in line with group policy of building market share through modest acquisitions across its divisions.
At the presentation of company results in May, Mr Flavin stressed group policy would be maintained.
He predicted “ambitious organic and acquisition growth” for the current year.
Last year it posted profits before tax just short of 100m, a figure underlined by its organic and acquisition growth in previous years.
Because of the nature of its services, businesses performances can be mixed, but the group has continued to deliver good shareholder returns and the market has responded.
In the year a solid second half helped offset tougher conditions in the first six months.
DCC was in “active” acquisition talks in almost all of its businesses, and deals this year would be mainly bolt-on, said the company. The firm is in a strong position financially, with net cash at €62.7 million at the end of March, up from €20.1m. The group also has a debt facility of €212 million in the US private placement market.
