{"id":714119,"date":"2026-07-27T19:46:12","date_gmt":"2026-07-27T19:46:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/714119\/"},"modified":"2026-07-27T19:46:12","modified_gmt":"2026-07-27T19:46:12","slug":"private-equity-finds-soft-takeover-targets-in-london-yet-again-nils-pratley","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/714119\/","title":{"rendered":"Private equity finds soft takeover targets in London \u2013 yet again | Nils Pratley"},"content":{"rendered":"

And another one goes. Dublin-based DCC Energy<\/a> is a lower-profile member of the FTSE 100, but they all count. We\u2019re now at five completed or agreed takeovers within London\u2019s leading index this year \u2013 and it\u2019s still only July.<\/p>\n

The subplot at DCC was vocal opposition from a few shareholders who thought the private equity groups KKR and Energy Capital Partners, a unit of Bridgepoint, should be paying more than the \u00a35.75bn, or \u00a365.25 a share<\/a>, at which the board has rolled over. Fidelity International and Aviva Investors were to the fore, as well as DCC\u2019s founder.<\/p>\n

The resistance movement had good points. DCC seems to be executing, roughly on time and on budget, the eight-year strategy it adopted in 2022 to double operating profits to \u00a3830m by 2030 by slimming down to its core energy operations.<\/p>\n

The core comprises old-school petrol stations and liquid gas distribution networks across Europe, plus a growing clean energy services division that installs solar panels and suchlike. DCC, in other words, is an energy transition play with a mix of old and reliable cash earners and newer growth assets \u2013 the sort of thing the market, in theory, ought to like. About 35% of the required growth in operating profits has been achieved, and the board says it \u201cremains confident\u201d in the 2030 ambition.<\/p>\n

So why sell at anything less than top dollar? Neither the 24% premium on the pre-action share price, nor the 36% cited as the boost to the 12-month rolling average, scream unmissable value.<\/p>\n

DCC Energy comprises old-school petrol stations and liquid gas distribution networks across Europe, plus a growing clean energy services division. Photograph: Fotogun\/Alamy<\/p>\n

Fidelity International\u2019s Alex Wright said at the start of this month he wouldn\u2019t accept less than \u00a370 a share and laid out his reasons: DCC\u2019s attractive returns on capital; the scope for growth through acquisitions; pricing power in a consolidating market; share buybacks to boost earnings per share; overdone fears about the structural decline of the fossil fuel distribution business; and the potential to scale up the renewable energy activities.<\/p>\n

DCC management\u2019s explanation for acceptance was the standard one about \u201ca compelling and certain opportunity for DCC Energy shareholders to realise value in cash today\u201d. Well, yes, there is always \u201cexecution risk\u201d in any strategy. But the revealing bit was the long grumble about the difficulty of finding new investors.<\/p>\n

\u201cThe DCC Energy shareholder register has become more concentrated in recent years and the number of market participants that have engaged in the story has reduced over time,\u201d the company said. Feedback suggested \u201cexposure to low-volume growth end markets\u201d \u2013 in other words, petrol stations and gas distribution \u2013 \u201cweighs on perceived terminal value and, in turn, DCC Energy\u2019s trading multiple\u201d.<\/p>\n

DCC managed to tickle up the bidders in stages from \u00a358 a share initially to \u00a365.25 (or almost \u00a368 if one includes an already paid dividend plus a contingent 125p that depends on a remaining technology business being sold at a good price), so one can\u2019t say the board has not negotiated hard. The chief executive, Donal Murphy, is almost certainly correct when he predicts the majority of shareholders will vote in favour.<\/p>\n

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But the basic plot here is yet another bad advert for London in terms of risk-taking and depth of capital. In short, a couple of private equity firms, via their infrastructure funds, are willing to take a far longer-term view of DCC\u2019s prospects than public market investors (with honourable exceptions) will.<\/p>\n

The story isn\u2019t new \u2013 most all-cash bids succeed \u2013 but a newly depressing feature is the regularity. Last week it was Segro, the warehouse landlord, falling to a bigger US rival for \u00a314bn<\/a>. The broker Peel Hunt calculated 154 bids for UK companies<\/a> with a market value of more than \u00a3100m, equating to \u00a3165bn of stock market capitalisation, since the start of 2023. They\u2019re not all private equity deals, of course \u2013 but London is the buyout brigade\u2019s happiest hunting ground. In the meantime, arrivals on the London market have dried to a trickle.<\/p>\n

In a different world, the shrinking of the UK stock market, and thus soft political power on a global stage, would be causing alarm in Westminster. Sadly, the political class either haven\u2019t noticed or aren\u2019t bothered. They\u2019ll regret it one day.<\/p>\n","protected":false},"excerpt":{"rendered":"And another one goes. Dublin-based DCC Energy is a lower-profile member of the FTSE 100, but they all…\n","protected":false},"author":2,"featured_media":714120,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[84,59,56,54,55],"class_list":["post-714119","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-business","tag-gb","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/714119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=714119"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/714119\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/714120"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=714119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=714119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=714119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}