DCC Energy, a Dublin-based FTSE 100 energy firm, has agreed to a £5.75bn takeover by private equity groups KKR and Energy Capital Partners, a unit of Bridgepoint. The deal, at £65.25 per share, represents the fifth completed or agreed takeover within London's leading index this year, as of July.
Shareholder opposition and valuation concerns
The acquisition faced vocal opposition from several shareholders, including Fidelity International, Aviva Investors, and DCC's founder, who argued the price undervalued the company. They pointed to DCC's execution of its eight-year strategy, adopted in 2022, to double operating profits to £830m by 2030 by focusing on core energy operations. About 35% of the required growth has been achieved, and the board expressed confidence in the 2030 ambition.
Fidelity International's Alex Wright stated he would not accept less than £70 per share, citing DCC's attractive returns on capital, growth through acquisitions, pricing power, share buybacks, and potential in renewable energy. The 24% premium on the pre-action share price and 36% boost to the 12-month rolling average were deemed insufficient by critics.
DCC's rationale for acceptance
DCC management justified the deal as a "compelling and certain opportunity for DCC Energy shareholders to realise value in cash today," citing execution risk. However, the company noted a shrinking shareholder register and reduced market participant engagement, with exposure to low-volume growth markets like petrol stations and gas distribution weighing on perceived terminal value and trading multiples.
The board negotiated the price up from an initial £58 per share, including a dividend and a contingent 125p from a technology business sale. CEO Donal Murphy predicted majority shareholder approval.
Implications for London's stock market
The deal highlights concerns about London's risk-taking and capital depth, as private equity firms take longer-term views than public market investors. This follows Segro's £14bn acquisition by a US rival and 154 bids for UK companies worth £165bn since 2023. The trend underscores London's appeal to buyout firms, while new listings have dwindled, raising questions about Westminster's attention to the shrinking stock market's global influence.
