Irish energy distributor DCC Energy has agreed to be taken over by a consortium led by private equity heavyweight KKR and Energy Capital Partners.
The deal values the company at close to $7.7 billion and is about $1 billion higher than KKR’s original offer, which was made in June.
The Irish company is among Europe’s largest energy distribution businesses, supplying LPG, fuel oils, and other energy products across multiple international markets. The company has spent recent years reshaping its portfolio through acquisitions and divestments, with an eye to increasing its focus on energy and related infrastructure.
With the war in the Middle East highlighting the importance of energy security, acquisition targets such as DCC Energy have naturally become a lot more attractive for private equity buyers seeking to expand in energy. Well aware of that, DCC rejected the original offer on the grounds that it undervalued the company.
Under the terms of the final proposal that got accepted, DCC shareholders would receive the equivalent of $87.17 per share in cash, a final dividend payment equal to $1.97 per share, and an additional payment of $1.67 if the Irish energy distributor can sell its technology division Nexora for at least $800 million, Reuters also said in its report on the acquisition deal.
Upon completion, the deal will become one of the biggest in Europe’s energy sector for the year. The Middle East war has revealed Europe as one of the most vulnerable regions to oil and especially gas shocks due to its overwhelming dependence on imports. Despite long-running and consistent efforts to reduce hydrocarbon commodity consumption in favor of electricity generated by alternative sources such as wind and solar, Europe has remained dependent on oil and gas for much of its energy consumption, boosting the profitability of companies such as DCC.
By Charles Kennedy for Oilprice.com
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