DCC to acquire UK computer distributor for €42m

Diversified fuels to computer group DCC plans to buy the English-based distributor of computer servers, Hammer, for £38.3m (€42.3m) in cash, in a move it hopes will allow it to tap the growing demand for cloud-based storage.

However, the company’s shares, which are listed in London, slipped by around 0.5%. The shares have nonetheless risen strongly this year, climbing 23% despite the potential challenges of Brexit.

Merrion Capital analyst Darren McKinley said the acquisition costs represented a multiple of six times Hammer’s Ebitda (earnings before interest, tax, depreciation, and amortisation, and met “DCC’s investment criteria”.

The acquisition should benefit group operating profit by around 2% to 3%, Mr McKinley said. DCC said Hammer posted operating profits of £6.3m and sales of £155m in the 12 months to the end of January.

Hammer distributes servers for manufacturers across Europe including Dell, NetApp, Seagate, Intel, and Western Digital, and will help DCC tap growth in cloud data centres, said chief executive Tommy Breen.

The acquisition “underpins management’s commitment to a division that has struggled in the recent past — 29% year—year decline in full-year 2016 operating profit — relative to energy and healthcare in particular,” said Gerry Hennigan, analyst at Goodbody Stockbrokers.