BP’s LPG unit in Britain is to be bought by the DCC group. The DCC Group, which is one of Ireland largest companies agreed to pay for the BP’s LPG business a €50 million in cash. The deal is due to be finalized next month.
The BP-DCC deal
The DCC Group, which decided to buy the BP’s LPG unit, employs approximately 9,000 people across 10 countries and it is one of the largest companies in Ireland. According to Tommy Breen, the chief executive of the group, the recent purchase will complete the existing business of the company. He noted: "DCC is pleased to have reached agreement with BP to acquire its liquefied petroleum gas distribution business in Britain." Moreover Tommy Breen said: "We have a successful track record in acquiring energy distribution businesses from the oil majors as they exit downstream activities, and this transaction will enhance DCC’s position as the leading oil and [liquefied petroleum gas] sales, marketing, and distribution business in Britain."
The DCC Group’s officials are convinced that the recent acquisition will complete its LPG business in Britain, Flogas, which sales 190,000 tons of LPG. Consequently, the BP’s LPG unit in Britain sells approximately 87,000 tons of bulk and cylinder fuel a year to industrial, commercial and domestic consumers. According to data, the BP unit had net operating assets valued at €38 million on December 31st. 116 people across 13 sites in Britain are employed by the BP.
The deal is not a surprise. Only in February BP’s officials announced plans of selling company’s bottles and tank-filling LP business and some wholesale activities in countries such as the UK, China and Portugal. Nonetheless BP claims to retain its LPG automotive business.
The deal is to be finalized by the end of the September. Then two divisions will be merged. The DCC group intends to integrate the BP unit with Flogas operation. The DCC Group did not confirm whether the merger of two businesses results in downsizing. Until regulatory approval of the deal is not obtained by the company, no DCC Group’s plans will be revealed. Accordingly, it takes six to eight weeks to receive the regulatory approval.
LPG market a new area of DCC expansion
Tommy Breen, the DCC Group’s chief executive, is convinced that the position of the company as the leader in oil and LPG sales as well as distribution business in Britain will strongly improve after the takeover enters into force. Breen reminded that the company had already taken over some businesses from oil major companies with a success. Those oil majors wanted to focus mainly on production not on distribution so that they willingly sold out their entities.
Accordingly, last September the DCC Group agreed to buy assets from Rontec Investments for €67 million. Moreover since the beginning of April DCC Group spent €25 million on a series of purchases.
The DCC Group consists of 5 businesses and DCC Energy is the biggest of all of them. DCC Energy is accounted for about €7.8 billion of its €10.7 billion revenues of the DCC Group in the last financial year. However DCC Energy’s operating profits dropped 39 percent to €85.5 million during the year. The company wants to develop and enter new markets. Up to date its plan has been coming into effect.