The US private equity consortium pursuing DCC has sweetened its offer with the prospect of an additional payment of up to £1.25 (€1.47) a share from the sale of the group’s technology unit.
However, this has failed to allay concerns among some top shareholders and small investors attending its annual general meeting (agm) that the group is set to be sold too cheaply.
DCC shareholders’ approval of a planned £1.47 dividend per share at the agm on Thursday, payable on July 23rd, has also effectively nullified the consortium’s inclusion of this payment in its proposal.
The bid from KKR and Energy Capital Partners therefore now stands at as much as £66.50 per share, or £5.68 billion (€6.69 billion) in total. The shares were trading at £63 late afternoon in London.
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Some major shareholders – including Fidelity International, DCC’s founder, Jim Flavin, and Aviva Investors – have signalled they will not support the latest pitch. The agm in Dublin also heard concerns being expressed about a deal being struck at the current bid level.
The latest offer would see shareholders receive as much as £1.25 extra per share – or €106.8 million in total – if DCC achieves at least $800 million (€697.6 million) from a sale of DCC’s tech division, known as Nexora, which is on the market and expected to be sold by the end of the year.
That is in addition to a cash offer of £65.25 per share that has been on the table since June 10th, which DCC’s board previously said it was “minded to recommend”.
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“If the net proceeds are below $800 million, the amount payable under the Nexora proceeds adjustment would reduce (potentially materially) progressively down to zero,” said DCC, which also secured agm approval to change its name to DCC Energy.
“I have never before seen a plc board appear so receptive to such a lowball offer from the likes of KKR, who are world-leading corporate raiders,” said Stephen Carroll, speaking as proxy for shareholder Alice Carroll.
[ DCC founder calls for ‘CRH-like’ independent ambition as board nears sale dealOpens in new window ]
A second small shareholder, who did not give his name, said he “fully endorsed” Carroll’s comments. Chairman Mark Breuer said the board has a duty “to look after the interests of all shareholders” and to “create as much value as we can for the body of shareholders”.
The board has not indicated whether it is preparing to back the current proposal.
KKR and Energy Capital have been granted a fourth deadline extension, until 5pm on July 27th, to make a formal offer or at least commit to a firm intention to do so.
Flavin, who retains a 3.2 per cent stake 18 years after resigning as executive chairman, said the latest proposal is “tinkering at best” and changes nothing in his view that DCC should remain independent and continue its growth strategy. He has said that if DCC is to be sold, the board should hold out for an offer of at least £100.
Aviva Investors, with a 2.2 per cent stake, said that the modestly improved offer is not enough. “It would represent a bad outcome for shareholders and accordingly we would not support it were the board to recommend it,” said Matt Bennison, head of UK active equities at the firm.
A spokesman for Fidelity Investment, which owns 6.9 per cent of the company, said the company has nothing to add to its previous statement two weeks ago, when it said it “would not accept anything below £70 in cash per share”.
DCC, whose businesses once spanned Robert Roberts tea and coffee to waste management, decided in late 2024 to abandon what remained of its conglomerate roots.
It sold its healthcare unit a year ago for an enterprise value of £1.05 billion. It also offloaded part of its technology business, with the remainder of that division currently on the market.
DCC said in a trading statement ahead of the meeting that the energy division was “trading ahead of the prior year” in its first fiscal quarter to the end of June, despite the conflict in the Middle East bringing forward some demand from customers into the previous quarter. The technology division was also doing better than the previous year, in line with expectations, it added.
