- Healthcare arm sold
- £945 million in net cash proceeds
- DCC to focus on energy business
Dublin-based DCC (DCC) has agreed to sell its healthcare division for £1.1 billion as part of a strategic overhaul that will see the group focus on its core energy business and return surplus capital to shareholders once the deal completes in the third quarter of this year.
Having been widely telegraphed for several months, the deal came as no surprise and along with the absence of an update on DCC’s plans for its technology manufacturing and distribution arm, this explains why the shares fell 3.7% to £47.96 after an initial bump.
ABOUT THE DEAL
Business support services giant DCC is selling DCC Healthcare to HealthCo Investment, a subsidiary of European private equity firm Investindustrial Advisors, in a deal valuing the division at around 12 times its 2024 adjusted operating profit of £88.1 million.
DCC said it expects to receive around £945 million in net cash proceeds, including a deferred £130 million to be paid within two years, and plans to return a significant portion of this to shareholders while still maintaining an investment-grade balance sheet.
The disposal marks a ‘material step’ in simplifying the firm’s operations and sharpening its focus on energy, its highest returning division.
When it first announced the plan last November, DCC said it also would sell its third business, DCC Technology, within two years, but the FTSE 100 company provided no further update today.
WHAT DID THE CEO SAY?
‘The disposal of DCC Healthcare is a material step in simplifying DCC’s operations and focusing on our high growth, high return, energy business,’ explained CEO Donal Murphy.
‘Our strategy will continue to build DCC as a market-leading multi-energy business. The profitable sale creates immediate value for our shareholders, and we are confident that Investindustrial will take DCC Healthcare forward in the best long‐term interests of its employees, customers and suppliers.’
AJ Bell investment director, Russ Mould, said: ‘The company wants to focus all of its attention on the energy business, which enjoys the strongest returns and accounts for the majority of its revenue. The business is arguably quite well-positioned for the uncertain pace of the transition away from fossil fuels, with expertise which spans areas such as liquid gas, solar energy and service stations.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Martin Gamble) own shares in AJ Bell.
