DCC, the Irish conglomerate seeking to narrow its focus to energy, has acquired Flaga, a leading gas distributor in Austria, for €55 million.
The company, which is based in Dublin but listed on the FTSE 100, bought the group from European gas company UGI International.
Flaga, founded in 1947, is headquartered in Vienna and employs about 90 people. The business sells and distributes approximately 45 million litres of liquid gas annually via its nationwide supply, filling, and distribution network.
It serves over 15,000 customers across bulk liquid gas where average customer lifetime is more than 15 years, and has a significant cylinder business. Flaga’s management team will continue to lead the business.
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DCC said the acquisition is based on an enterprise value of approximately €55 million on a cash-free, debt-free basis and the consideration will be settled in cash on completion.
The company expects the acquisition to generate a mid-teen return on capital employed in the first year of ownership. The deal is subject to customary regulatory approval and expected to complete by the end of the group’s financial year.
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DCC has been in the liquid gas market for nearly 50 years, building positions in six countries and establishing growth platforms in a further three. Liquid gas is central to its growth strategy and accounts for the biggest part of the operating profit in its energy division.
“As a lower carbon energy solution, it is one of our key priorities for growth and for capital deployment,” DCC said.
“The acquisition of Flaga marks our entry into the Austrian liquid gas market, where we already have a leading liquid fuels business and a growing presence in energy services.”
DCC also announced the bolt-on acquisition of UK-based AvantiGas’s cylinder business from the same company earlier in October.
DCC chief executive Donal Murphy said the company is committed to expanding its liquid gas business in both new and existing geographies.
“Liquid gas represents a compelling opportunity for DCC and is one of our two key growth priorities,” he said.
The group said in April that it had agreed to sell its healthcare division – which spans the distribution of medical devices to developing and manufacturing nutritional supplements – for £945 million in cash.
