DCC buys energy firm for €47m

DCC has further boosted its British energy division by acquiring Scottish fuel distributor Brogans for €47.2 million.

The Motherwell-based company, which also operates in the fuel card business, is DCC Energy’s thirdrecent acquisition, following on from Bayford Oil in England and Shell Direct Austria (SDA). This latest deal increases DCC’s share of the British energyservices market to around 14%.

DCC group chief executive Tommy Breen said: “The acquisition of Brogans will further enhance DCC Energy’s position as the leading oil distributor in Britain and will also significantly increase the scale of DCC’s fuel card operations in Britain.

“We are confident that the integration of Brogans with our existing oil distribution and fuel card activities will deliver returns on capital, broadly commensurate with previous energy acquisitions.”

Based in Scotland, Brogans sold 447m litres of fuel in the 12 months to the end of May across commercial, industrial, agricultural and domestic customers. It generated operating profits of €7.9m and sales of €329m.

Brogans markets fuel cards under a number of leading brands including BP, Diesel Direct, Shell and Texaco.

In a note issued yesterday, following up on the Brogan’s announcement, Dan Cavanagh of Goodbody Stockbrokers, wrote: “As the economy recovers, it appears to us that DCC’s acquisition programme is gaining pace, with merger/acquisition spend of justunder €120m in the year to date, which is already ahead of the €102m deployed in 2008.”

Davy Stockbrokers recently said that DCC could only really boost shareholder value by pumping most of its future investment into its energy division and yesterday’s announcement led Davy to suggest the Brogans deal “provides further evidence of management’s ability to allocate capital in a returns-enhancing manner”.

While DCC’s share price has suffered since its recent better-than-expected first half figures, the group’s share price was up by nearly 2% at €19.60 yesterday.

Brogan’s is the second largest fuel distribution business in the Scottish market – second only to DCC itself – and this acquisition will add 15 depots to the 25 DCC Energy already operates in the country.


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