Another FTSE 100 company leaves public markets
Dublin-based DCC Energy has become the latest FTSE 100 company to be acquired, with private equity firms KKR and Energy Capital Partners, a unit of Bridgepoint, agreeing to purchase the company for £5.75 billion, or £65.25 per share.
The deal marks the fifth completed or agreed takeover involving a company from the UK’s leading stock index this year, despite the calendar only reaching July. The transaction has renewed concerns about the depth of London’s capital markets and the ability of UK-listed companies to remain independent.
Shareholders questioned the takeover price
The acquisition faced opposition from several shareholders who argued that the private equity buyers should have offered more. Fidelity International, Aviva Investors and DCC’s founder were among those calling for a higher valuation.
Critics argued that DCC was successfully executing its eight-year strategy announced in 2022, which aims to double operating profits to £830 million by 2030 by focusing on its core energy businesses.
A business built around energy transition
DCC Energy combines traditional energy operations, including petrol stations and liquid gas distribution networks across Europe, with a growing clean energy division focused on areas such as solar installations and energy solutions.
The company represents a blend of stable cash-generating businesses and newer growth opportunities. Around 35% of the operating profit growth required to meet its 2030 target has already been achieved, and management said it remains confident in reaching its goal.
Investors argued the company was undervalued
Fidelity International’s Alex Wright said earlier this month that he would not support a deal below £70 per share. He highlighted DCC’s strong returns on capital, opportunities for acquisitions, pricing power in a consolidating market, share buybacks and the potential expansion of its renewable energy activities.
He also argued that concerns over the long-term decline of fossil fuel distribution businesses had been exaggerated, creating an opportunity for investors who recognised the company’s future growth potential.
DCC management prioritises certainty
The company’s board defended the agreement as a compelling opportunity for shareholders to receive immediate cash value while avoiding the execution risks associated with a long-term strategy.
DCC said investor engagement had declined in recent years, with some market participants viewing its exposure to slower-growth businesses such as petrol stations and gas distribution as a factor limiting its valuation multiple.
Another warning sign for London’s stock market
Although DCC managed to push the offer price higher from an initial £58 per share to £65.25, the takeover has reinforced concerns that UK public markets are struggling to support and retain major companies.
The deal highlights a broader trend in which private equity firms appear willing to take longer-term positions in UK businesses compared with many public market investors.
London remains a target for global buyers
DCC’s acquisition follows other major takeovers of UK-listed companies. Last week, warehouse landlord Segro agreed to be acquired by a larger US rival in a £14 billion deal.
Broker Peel Hunt calculated that 154 bids have been made for UK companies with market values above £100 million since the beginning of 2023, representing approximately £165 billion in stock market value.
Although not all of these transactions involve private equity, London has increasingly become an attractive hunting ground for buyers while new listings on the UK market have slowed significantly.
Concerns grow over the future of UK markets
The continued shrinking of the UK stock market has raised concerns about Britain’s financial influence and competitiveness globally. Despite the growing number of takeovers, political attention toward the issue has remained limited.
Market observers warn that the loss of major listed companies could have long-term consequences for London’s position as a leading global financial centre.
