DCC Energy, a Dublin-based FTSE 100 energy company, has agreed to a £5.75bn takeover by private equity groups KKR and Energy Capital Partners, a unit of Bridgepoint. The deal, at £65.25 per share, marks the fifth completed or agreed takeover within London's leading index this year.
Shareholder opposition
Few shareholders, including Fidelity International, Aviva Investors, and DCC's founder, opposed the deal, arguing the price was too low. Fidelity International’s Alex Wright had stated he would not accept less than £70 per share, citing DCC's attractive returns on capital, growth potential, pricing power, and the undervaluation of its fossil fuel and renewable energy operations.
DCC's board maintained that the offer provided “a compelling and certain opportunity for DCC Energy shareholders to realise value in cash today.” The company noted that “the DCC Energy shareholder register has become more concentrated in recent years and the number of market participants that have engaged in the story has reduced over time,” adding that exposure to low-volume growth end markets “weighs on perceived terminal value and, in turn, DCC Energy’s trading multiple.”
Execution and strategy
DCC is executing an eight-year strategy adopted in 2022 to double operating profits to £830m by 2030 by focusing on its core energy operations: petrol stations, liquid gas distribution networks across Europe, and a growing clean energy services division. About 35% of the required growth has been achieved, and the board remains confident in the 2030 ambition.
Bidders raised their offer from £58 to £65.25 per share (or nearly £68 including dividend and a contingent 125p from the sale of a technology business). Chief executive Donal Murphy predicted that the majority of shareholders will vote in favour.
London market concerns
The deal highlights a trend of private equity taking longer-term views than public market investors. Since the start of 2023, there have been 154 bids for UK companies with a market value over £100m, totalling £165bn in market capitalisation. New listings in London have nearly dried up. The shrinking of the UK stock market has not caused alarm in Westminster, a situation the article suggests may be regretted in the future.
