DCC Energy agrees to "compelling" GBP5.75 billion takeover offer
DCC Energy PLC on Monday recommended a "compelling" £5.75 billion takeover offer from a consortium comprised of funds advised by Kohlberg, Kravis, Roberts & Co LP and Energy Capital Partners Management LP.
KKR & Co is a New York-based private equity firm while Energy Capital Partners is a New Jersey-based infrastructure investor. The offer is being made by Dragon Bidco Ltd, a new vehicle set up by the consortium.
Formerly known as DCC, the Dublin-based provider of sales, marketing and distribution services to the energy sector noted that the bid is for 6,797.22 pence per share in cash, including a 6,525p base consideration and the final dividend of 147.22p per share declared for the year ended in March, valuing DCC Energy at £5.75 billion in total.
Investors may receive an additional payment of up to 125p per share, conditional on the sale of the Nexora business, which DCC Energy is looking to divest. It has not yet entered a binding sale agreement, but the disposal may completed before the takeover.
This latest bid is a slight improvement on the offer DCC Energy said last month it was minded to recommend. The KKR and Energy Capital consortium's previous offer was for 6,672.22p per share comprising 6,525.00p in cash and the proposed final dividend of 147.22p each.
DCC Energy shares rose 1.1% to 6,355.00 pence each on Monday morning in London, giving it a market capitalistion of £5.43 billion.
The company stressed that it remained confident in its potential as a standalone business, but said the bid "represents a compelling and certain opportunity for DCC Energy shareholders to realise value in cash today."
The company said it had made progress in simplifying the business and working towards its goal of doubling operating profit to £830 million by 2030, but acknowledged that "delivering the remaining growth required to meet the 2030 ambition would require sustained organic execution and successful M&A deployment against an uncertain macroeconomic, regulatory and energy transition backdrop".
"The DCC Energy board has also taken into account that, despite extensive market engagement and the strategic progress made, DCC Energy has not sustainably re-rated in the public markets. Following a robust and lengthy negotiation with the consortium, the DCC Energy board considers that the acquisition provides shareholders with an attractive premium, cash certainty and value at a level above that which DCC Energy has been able to achieve consistently in the public markets."
The board's unanimous recommendation to vote in favour of the takeover is supported by advisors from UBS Group AG and JPMorgan Chase & Co, DCC Energy noted.
Shareholders with a combined 0.28% stake in the company have committed to support the takeover.
DCC Energy Chair Mark Breuer commented: "Since setting out its new strategy in 2022, DCC Energy has successfully repositioned to become a simpler, leaner, and more focused business. This strategic clarity has laid the foundations for sustainable long-term value creation as a leading multi-energy solutions provider.
Breuer continued: "Whilst the DCC Energy board remains confident in the energy strategy and associated 2030 Ambition announced in 2022, the board believes the consortium's offer represents a compelling opportunity for shareholders to crystallise value in cash at an attractive premium to DCC Energy's historical trading price. We are confident that the consortium will be strong stewards of DCC Energy's 50-year heritage and support the business during its next phase of growth."
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