DCC buyout offer rejected -but now approved by board

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joe sod

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m.independent.ie

Irish energy distributor DCC knocks back takeover bid that ‘undervalues’ the business

DCC says it has rejected a takeover approach from a consortium of from Energy Capital Partners and KKR, because the offer was too low.
m.independent.ie m.independent.ie

Very interesting whats going on with boring old DCC. They have been undervalued for years and now a private equity outfit from US has offered to buy them out at a healthy premium but that has been rejected by DCC as undervaluing the company.
Also interesting that only last december DCC itself bought out some of its own shareholders ,there was a lively and interesting discussion on it here aswell.
But it shows that patience in the stock markets eventually pays off.
 
The Posting Guidelines are very clear

19 We don't discuss individual shares
You won't find any messages suggesting investing in CRH or asking if AIB is a good investment. That is not the purpose of Askaboutmoney. We don't facilitate stock tipping or speculation about the future performance of individual shares. There are other forums which discuss individual shares such as The Investments and Markets Forum of boards.ie

This guideline does not restrict you from discussing
the mechanics of buying or selling shares in a flotation
Rights issues - pricing and mechanics
Dividend Reinvestment Plans – pricing and mechanics
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It is ok to ask a question on the mechanics of the takeover process.
For example, the following are ok.
  • If a higher offer is made and the board accepts it, what would the timeline be?
  • Can I hold onto my shares if I want to?
  • The takeover has been agreed at €X per share. Why is the share price lower than that?
  • What are the tax implications of this takeover?


But discussing the value of the company is not allowed.
The following are not allowed:
  • The bid undervalues/fully values the company and the board would be stupid to accept/reject it.
  • The bid has been agreed - is there any advantage in selling them in the market now?
 
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It does not seem to be being discussed on boards.ie or reddit. If someone can find such a discussion, please link to it.
 

Jim Flavin says bid for DCC ‘beggars belief’ and labels it a ‘derisory offer’​

The founder of DCC, Jim Flavin, has insisted that he is not in conflict with its board although it “beggars belief” that directors are minded to accept a “derisory offer” for the Irish energy group.
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www.businesspost.ie

‘Stop this bid’: Have angry investors heaped enough pressure to get a higher price for DCC?

www.businesspost.ie www.businesspost.ie

‘Stop this bid’:​

Have angry investors heaped enough pressure to get a higher price for DCC?​

The takeover offer for DCC is not going smoothly. A debate over the price was almost inevitable but the consortium were likely hoping their revised offer was going to be enough, particularly since the board said they were “minded to recommend” the deal.

That’s not been the case.

In the past week large shareholders have come out against the deal, which would see investors paid £66.72 (€78.35) per share.
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DCC have accepted the buyout offer now

"The offer is for a £65.25-a-share upfront payment, with an add-on of up to £1.25 a share if the group achieves at least $800m (€698m) from the sale of its tech division."

So another irish company taken private, the irish stock exchange is shrinking rapidly even though DCC was only listed in London.
Now irish continental group also has a bid to be bought out by its management team led by eamon rothwell. So there will be virtually no irish companies left on the public markets except ryanair and a couple of banks. We are a long way away from the halcyon days of the year 2000 when the irish stock exchange had loads of companies including tech and pharma stocks, now all that is gone.
 

DCC boss rejects criticism over accepting €6.7bn offer for Irish company​

Several shareholders opposed the deal, although it seems unlikely they will be able to muster the 25pc of votes needed to block it​

The chief executive of DCC Energy has said the board “negotiated very hard” before accepting a cash takeover offer from two US private equity groups that values the Irish company at £5.75bn (€6.7bn).

Donal Murphy said it turned down six previous offers from Energy Capital Partners (ECP) and Kohlberg Kravis Roberts (KKR) and had worked hard over 90 days to “extract what we believe is the most we could get out of the consortium”.
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Assuming everything is approved, when will this actually go through?

Yahoo Finance says that the latest date is July 2027. But what is the earliest date?

The reason I ask is that I will have a CGT liability. It would suit me better to have it in 2027 than 2026.
 
I don't think that the date for the General Meeting to approve the sale has been set yet. I presume that they need to give at least 4 weeks notice, so that is unlikely to happen until October.

What approvals are required after that? Competition Authority in the UK should be quick enough as it's not really controversial.
 
I got a reply from Investor Relations

"We expect the earliest completion date for the transaction to be in Q1 2027. No date has yet been set for the EGM to vote on the transaction, although it is likely to take place in September."
 
www.irishtimes.com

Actions fail to match words among DCC investors objecting to deal

Sale of shares at levels below an offer they dismiss as not good enough adds to summer turmoil at listed targets
www.irishtimes.com www.irishtimes.com
And then we have DCC, where an array of investors have lined up against the £65.25 (€76.35) per share offer from two US private equity groups, claiming it significantly undervalues the business.

Even the sweetener of an additional payout of up to £1.25 a share if the sale of its tech division secures a certain price has failed to convince objectors, among whom Fidelity, Aviva, Ninety One and Marathon rank prominently.

Investment giant Fidelity said the bid did not “adequately” reflect fair value of DCC and its long-term growth prospects, saying it “would not accept anything below £70 in cash per share”.

Aviva’s view? “We firmly believe that [it] is not in the interest of our clients to sell the business at this level.”

A Ninety One equity manager said his group didn’t like the price while Marathon said the addition of the potential top-up was a minor tweak.

Fair enough but what should we make then of all four institutional investors selling shares into the market at prices below the level of this “underwhelming” offer – in some cases well below.
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Well, if they are selling their shares for less than they would get under the buyout bid, that might suggest they don't expect the bid to succeed, mightn't it? If you thought you were a shoe-in for £65.25-62.50 in Q1 2027, you wouldn't be minded to sell for much less than that now.

But, equally, if you think the fair value of the company, taking into account of its long-term prospects, is £70 or more, you also wouldn't want to sell now for the current low price.

So, either way, for these shareholders, this share should be a hold, not a sell. And yet they're selling. What gives?

The answer may lie in the fact that the three shareholders mentioned as doing this are all financial institutions, managing other people's money, according to investment mandates that they are bound to follow. Maybe the sales of DCC shares are driven by index tracking strategies, or by a mandate that requires them to reduce their exposure to the sectors in which DCC operates. Maybe they see particular value in some other share or some other sector, and they are selling DCC in order to buy into that. Or whatever.

Neither the existenc of the bid nor the three shareholders expressed views about value explain these sales. Something else must, and we don't know what it is. But the fact that they are selling does not mean that their expressed views about value are insincere, any more than it means that the £65.25 is likely to fail.
 
TomEdison said:
Well, if they are selling their shares for less than they would get under the buyout bid, that might suggest they don't expect the bid to succeed, mightn't it? If you thought you were a shoe-in for £65.25-62.50 in Q1 2027, you wouldn't be minded to sell for much less than that now.

But, equally, if you think the fair value of the company, taking into account of its long-term prospects, is £70 or more, you also wouldn't want to sell now for the current low price.
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TomEdison said:
Neither the existenc of the bid nor the three shareholders expressed views about value explain these sales. Something else must, and we don't know what it is. But the fact that they are selling does not mean that their expressed views about value are insincere, any more than it means that the £65.25 is likely to fail.
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£63.70 current stock price to £65.25 deal close price.The base deal spread is currently only ~2.43%.

This thin spread implies a very very high probability that the deal closes as per the terms. DCC may be worth way more but the spread tells you there is no probable route to get a higher bid nor stop the deal closing. The timeline to deal close is maybe ~6-9 months.

As a large asset manager your clients don't hire you to be an activist nor to hold a stock with an expected 6-9 month return of 2.43%. Your hurdle is at least 8-10% return & your day job is raising more money to put under management and then deploying that money via your proprietary research into equities (not activism). The choice is simple here you sell DCC and invest the proceeds into an equity that requires zero activism and has an expected return that exceeds 2.43%.
 
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