Centrica plc and DCC plc today announced that DCC, the business support services group, has reached agreement to acquire, subject to completion, Centrica’s liquefied petroleum gas (LPG) business, British Gas LPG, for a consideration of £41.1 million (approximately €64.5 million) in cash.
The sale of the business comes after a strategic decision by Centrica to focus on direct customer relationships in its core businesses, whereas a large portion of the LPG cylinder business operates through third party retailers.
DCC is already one of the leading companies in the LPG market in Britain and Ireland, operating under the Flogas and Alta Gas brands. The acquisition of British Gas LPG will double DCC’s share of the British market to 21%, making it the second biggest LPG company in Britain.
In the year ended 31 December 2001, British Gas LPG generated operatingprofits of £2.3 million on turnover of £54.1 million. For the eight months to 31 August 2002, unaudited operating profits were £2.9 million. The business had net assets at 31 August 2002 of approximately £40 million net of debt of £2.1 million.
The assets being transferred consist mainly of bulk tanks at customers’ premises, cylinders, road tankers, 23 depots, an operations centre in North Wales and a commercial centre at Witney, Oxford. Consultations with British Gas LPG employees and trade unions are now taking place. It is anticipated that the transaction will be completed by the end of November 2002.
Jim Flavin, Chief Executive and Deputy Chairman of DCC, said: “The acquisition of British Gas LPG continues the strong growth momentum in DCC’s substantial energy operations. This acquisition, along with the Alta Gas acquisition last year, will significantly strengthen DCC’s position in the LPG market in Britain and is expected to lead to a substantial increase in the profit contribution to DCC Energy from this market.”
Mark Clare, Managing Director of British Gas, said: “This transaction is in line with Centrica’s strategy of concentrating on building deeper customer relationships and our commitment to continue delivering shareholder value by focusing on our core businesses. We are delighted to have reached this agreement with DCC, who we believe are in an excellent position to continue to provide the highest standards of service to this customer group.”