3 Min Read
(Reuters) - London-listed DCC Plc (DCC.L) said it would buy the retail petrol station network of ExxonMobil's (XOM.N) Norwegian unit, Esso Norge AS, for 2.43 billion Norwegian crowns (£236.97 million).
DCC, whose activities range from oil distribution to waste management, said the total consideration, along with the value of stock in tank at the date of acquisition, would be paid in cash.
The stock rose 6.6 percent to 6,795 pence as of 0920 GMT, making it the top gainer on the FTSE 100 index .FTSE
Dublin-based DCC, which gets nearly half of its profit from Britain and Ireland, has been expanding into western Europe in recent years through acquisitions.
The company, which has in the past bought assets from oil companies such as Chevron (CVX.N) and Total (TOTF.PA), has been scouting for opportunities to purchase distribution and market assets from oil majors as they slim down their portfolio to ride out an oil price slump.
Esso's retail petrol station network has 142 company-operated sites and contracts to supply 108 Esso-branded dealer-owned stations, DCC said.
The business will be integrated into DCC's energy unit and DCC will sign a long-term supply agreement with Esso Norge.
The acquisition is "high quality" and "meaningful", Morgan Stanley analysts wrote in a note, citing expected return on acquisition capital of nearly 15 percent in the first full year of ownership. The firm has an "overweight" rating on the stock.
The transaction is expected to close in the final calendar quarter of 2017, the company said.
The Norwegian acquisition follows DCC's deal in November to buy a 97 percent stake in French natural gas retail and marketing business, Gaz Europeen, for an enterprise value of 110 million euros (96 million pounds).
Separately, DCC said on Tuesday the group operating profit for the third quarter ended Dec.31, 2016 was "strongly ahead" of the prior year and in line with its expectations, helped by strong performance of its energy unit.
(This version of the story corrects to remove reference to DCC owning a food distribution business in paragraph 2.)
Reporting by Rahul B in Bengaluru; Editing by Amrutha Gayathri and Sunil Nair