It looks like there is still a road to travel in the mooted take-private of Dublin-based listed energy company DCC by US private equity group KKR and Energy Capital Partners (ECP), a subsidiary of London-listed Bridgepoint.
The Financial Times reported over the weekend that big shareholders in DCC are opposed to the £5.7 billion (€6.7 billion) takeover.
To recap, on April 29th, DCC revealed that KKR and ECP had made an offer of €58 per share for DCC, which was rejected.
On June 10th, the company announced that the financial terms had been approved by 15 per cent, via a mix of cash and a dividend payment.
The board said it was “minded to recommend” the offer to shareholders, and that it intended to engage in talks with the consortium and would allow some due diligence to take place.
The trail since then had largely gone cold until DCC’s big shareholders emerged into the open to declare their unhappiness with what’s on offer.
Alessandro Dicorrado, a UK equity manager at Ninety One, a top shareholder, told the FT that he opposed the bid, adding: “I don’t like the price on DCC.”
Matt Bennison, head of UK equities at Aviva Investors, a top-10 shareholder, said the proposal “significantly undervalues” the business and that the asset manager “would be disappointed if the DCC board were to recommend an offer for the business at the level of £65.25 per share.
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“DCC is a company with many appealing characteristics – a strong and growing platform with a high return on capital and attractive cash generation.”
He said DCC’s “strong fundamentals mean that the company has multiple levers through which it can create significant value for existing shareholders over the coming years – organic growth, inorganic growth as well as an ability to return significant amounts of excess cash to shareholders via dividends and ongoing share buy-backs”.
Alex Wright, UK equity fund manager at Fidelity International, one of DCC’s biggest investors, said that “we do not believe the revised proposal from the consortium adequately reflects our fair value of DCC and its long-term growth prospects”.
It is unusual for such high-profile investors to go public in this way about an offer for an investee company. It leaves the private equity firms in no doubt about the need to increase their offer if they want to acquire the London-listed business.
Under Irish takeover rules, the private equity firms have until 5pm on Wednesday to announce a firm offer for the London-listed business or declare that they reached the end of the road with their bid.
Either way, it should make for a lively annual general meeting at the Clayton Hotel in Leopardstown on July 16th.
