DCC Regulatory News (DCC)

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 (£152 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 tonnes1 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 $281 million (£21 million) and EBITA of $201 million (£15 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 £12.3 billion and operating profit of £345 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.