TIDMDCC
RNS Number : 7555V
DCC PLC
07 November 2017
7 November 2017
DCC LPG makes first acquisition in large US LPG market
DCC plc, the leading international sales, marketing and support
services group, announces that DCC LPG has reached agreement with
NGL Energy Partners LP ("NGL") to acquire its Retail West LPG
division, Hicksgas LLC ("Retail West" or "the business"), based on
an enterprise value of US$200 million (GBP152 million).
The acquisition represents DCC LPG's entry into the US market
and is a further significant step in DCC's strategy to build a
global LPG business over time. The US is one of the world's largest
LPG markets and is an attractive and growing market. It is also
highly fragmented, with over 4,000 LPG distribution businesses
operating in the market. The acquisition of Retail West will
provide DCC with a substantial, high-quality presence in the US
with leading market positions in a number of states. The business
has an excellent customer base, a strong and well-invested
operational infrastructure and an experienced management team.
The transaction is expected to complete on 31 March 2018,
following receipt of customary regulatory consents and separation
from NGL.
The Retail West business
Headquartered in Illinois, Retail West has been in business for
over 70 years and currently employs 390 people. It sells
approximately 130,000 tonnes(1) of LPG annually from 43 customer
service locations and 58 satellite facilities. The business trades
under three prominent regional brands, Hicksgas, Pacer Propane and
Propane Central, and a number of smaller, local brands. Retail West
has leading market positions in Illinois, Indiana and Kansas and
also operates in seven other states across the Mid-West and
North-West regions.
The business has a long-established and loyal base of 65,000
customers. Approximately two thirds of annual volume is sold to
residential customers, predominantly for heating purposes, with the
balance sold to commercial and agricultural customers in both small
and large bulk format.
Retail West has a well-invested asset base of approximately 100
bulk storage facilities and a company-owned distribution fleet of
over 150 vehicles. Retail West also owns the majority of tanks on
customer premises.
The business has an experienced and long-serving management team
who have a strong track record of delivering both organic and
acquisition growth. It has operated as a standalone division within
NGL and will continue to operate and develop under the leadership
of its existing management team, post completion of the
acquisition.
Retail West is expected to initially deliver an annual EBITDA of
approximately $28(1) million (GBP21 million) and EBITA of $20(1)
million (GBP15 million). The acquisition will be earnings accretive
from completion and the after tax cash payback will be
approximately 10 years. The business is very well placed to
continue its track record of profitable organic growth and also
provides a base for synergistic acquisition activity, both of which
would further enhance returns.
Strategic rationale
DCC LPG's strategy is to be a global leader in the sales and
marketing of LPG, with a developing business in the retailing of
natural gas and electricity. The acquisition of Retail West is in
line with this strategy and will give DCC a material footprint in
the very large, fragmented and growing US LPG market. It marks DCC
LPG's entry into the US market and provides a substantial base for
further development in the region.
Donal Murphy, Chief Executive of DCC plc, said today:
"The acquisition of Retail West in the US is an exciting
development for DCC and is consistent with our ambition to build a
substantial presence in the global LPG market. Our LPG business has
grown significantly in recent years and Retail West will give DCC a
material platform for development in the large, fragmented and
growing LPG market in the US. We very much look forward to
welcoming the Retail West management and employees into the DCC
Group and working together to grow and develop Retail West into the
future".
Note 1: Assuming normal winter weather conditions
For Reference:
Donal Murphy, Chief Executive
Fergal O'Dwyer, Chief Financial Officer
Kevin Lucey, Head of Capital Markets
Telephone: +353 1 2799 400
Email: investorrelations@dcc.ie
Powerscourt (Media)
Samantha Trillwood / Victoria Palmer-Moore
Telephone: +44 20 7250 1446
Email: DCC@powerscourtgroup.com
About DCC plc
DCC is a leading international sales, marketing and support
services group with a clear focus on performance and growth. It
operates through four divisions: LPG, Retail & Oil, Healthcare
and Technology.
DCC is an ambitious and entrepreneurial business operating in 15
countries, supplying products and services used by millions of
people every day throughout Europe. Building strong routes to
market, driving for results, focusing on cash conversion and
generating superior sustainable returns on capital employed enable
the Group to reinvest in its business, creating value for its
stakeholders.
Headquartered in Dublin, employing approximately 10,000 people,
DCC's four divisions are:
-- DCC LPG - a leading liquefied petroleum gas ("LPG") sales and
marketing business in Europe, with a developing business in the
retailing of natural gas;
-- DCC Retail & Oil - a leader in the sales, marketing and
retailing of transport fuels and commercial fuels, heating oils and
related products and services in Europe;
-- DCC Healthcare - a leading healthcare business, providing
products and services to healthcare providers and health and beauty
brand owners; and
-- DCC Technology - a leading European sales, marketing and
services partner for global technology brands.
DCC plc is listed on the London Stock Exchange and is a
constituent of the FTSE 100. In its financial year ended 31 March
2017, DCC generated revenue of GBP12.3 billion and operating profit
of GBP345 million.
DCC has an excellent record, delivering compound annual growth
of 14% in operating profit and generating an average return on
capital employed of approximately 19% over 23 years as a public
company.
About DCC LPG
DCC LPG is a leading liquefied petroleum gas ("LPG") sales,
marketing and distribution business in Europe, with a developing
business in the retailing of natural gas and electricity. DCC LPG
currently operates in seven countries across Europe and has leading
market positions in France, Britain, Ireland, Norway, Sweden and
The Netherlands. Following the completion of two recently announced
acquisitions, DCC LPG will also have substantial operations in the
US and Hong Kong & Macau.
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQQDLBBDFFEFBK
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November 07, 2017 02:00 ET (07:00 GMT)
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