Jim Flavin, the founder of FTSE 100 energy group DCC, said he was “astounded” after the company’s board recommended a £5.75bn takeover by US private equity firms KKR and Energy Capital Partners — a deal he called a “charade” and “totally inadequate”.
The Dublin-based supplier of liquid gas and fuels, which owns LPG distributor Flogas, has struggled to win over its biggest shareholders despite a 36% premium on its three-month average share price before the talks became public. The cash offer of £65.25 per share includes a potential £1.25 sweetener conditional on the sale of DCC’s technology arm, Nexora, reaching a certain price.
“DCC Energy agrees £5.75bn takeover by KKR and Energy Capital Partners despite founder and major shareholders' opposition.”
“Why would the board go along with such a charade?” Flavin said. “I regard this price as totally inadequate.” The founding investor, one of DCC’s largest stakeholders, was joined in his criticism by Aviva Investors and Fidelity, which also hold significant stakes.
Matt Bennison, head of UK active equities at Aviva Investors, said last week that the takeover would “represent a bad outcome for shareholders” and that Aviva would not support the deal even after the board’s recommendation. The “increased” offer, he added, “is unsurprisingly not enough. We firmly believe that [it] is not in the interest of our clients to sell the business at this level.”
DCC’s board, however, described the bid as “a compelling and certain opportunity”. The company’s updated strategy in 2022 set an ambition to double operating profits to £830m by 2030.
The proposed deal adds to a growing exodus of companies from the London Stock Exchange. Recent take-private agreements include Mitie, Tate & Lyle and the William Hill owner, Evoke. Budget airline easyJet is already the subject of a possible £5.7bn offer.
For critics, the DCC takeover underscores how private equity finds soft targets in London — and raises questions about whether shareholder opposition can derail a deal that the board has already endorsed.