Diversified support services group DCC has reached agreement to sell 80% of its food and beverage division for €60m.

Irish consumer foods group, Valeo Foods — which owns such brands as Odlums, Roma and Erin — is set to buy the Robert Roberts and Kelkin brands from DCC, depending on Competition Authority approval.

The two brands (Robert Roberts also includes the Findlater wine and spirits business) are being sold at more than eight times their combined operating profit.

In DCC’s most recent financial year — up to the end of March — the two brands generated combined revenue of €120m and operating profit of €7.3m.

This represented around 80% of DCC’s total food and beverage division, on a profit basis. The unit, as a whole, represented 3.7% of the group’s total operating profit in the last year.

Speaking yesterday, Tommy Breen, DCC’s group chief executive, said that the two brands being disposed of have a long and successful history in the Irish market. “We expect them to continue to grow and develop under Valeo’s ownership,” he added.

DCC has declined to comment on its plans for the remainder of its food and beverage unit, despite recent speculation that it was looking to sell it off totally. Davy Stockbrokers said yesterday that the contribution of the remainder of the division (a 50% stake in Kylemore Services and Allied Foods) is now “largely immaterial” at less than 1% of group earnings.

Nevertheless, Davy analyst Allan Smylie suggested the Robert Roberts and Kelkin sale is a small, but positive step in improving the overall group’s returns profile.

“We estimate just under 3% headline earnings per share dilution on an annualised basis post completion of the deal,” said Mr Smylie.

This is pre the potential redeployment of the proceeds into value-enhancing mergers and acquisitions.”

The deal is expected to be concluded by the end of this year and analysts expect DCC to use the proceeds to fund future acquisitions in other areas of the group.

“Assuming closure in November/December, we expect minor net earnings per share dilution of around 2p in full-year 2015 and around 6p in full-year 2016, equating to around 2.6% on an annualised basis,” Mr Smylie said.

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