DCC, the Irish conglomerate seeking to narrow its focus to energy, may end up securing just £633 million (€733.4 million) for its technology division, according to Goodbody Stockbrokers.
The figure is about a fifth less than the £800 million Goodbody analyst Kenneth Rumph had originally expected the business to achieve when DCC said in November that it was examining “strategic options” for it.
It is substantially below estimates of more than £1 billion that some investment houses, including Deutsche Numis, had initially put on the division.
Goodbody’s revised estimate comes in advance of DCC’s annual general meeting (agm) on Thursday, and follows a weak set of annual results for the division, revealed in group results in May and mounting concerns about the impact of tariffs and cautious consumers on its key US business.
READ MORE
Founded in 1976 by businessman Jim Flavin as a provider of venture capital for start-ups before floating almost two decades later, DCC revealed in November it was ditching its conglomerate roots with a plan to sell its healthcare division and review “strategic options” for its technology business, in order to focus on its energy unit.
DCC, led by Donal Murphy, agreed last month to sell the healthcare unit to HealthCo Investment, which is owned by funds run or advised by London-based private equity firm Investindustrial Advisors for £945 million in cash, plus £130 million in deferred payments. Leases, taxes owing and other liabilities transferring with the healthcare unit bring the total enterprise value of the transaction to £1.05 billion.
The Juggle: the issues facing women with young children when balancing childcare and their careers
That deal fell well short of the £1.3 billion to £1.6 billion some analysts had expected.
The tech unit, which distributes audiovisual equipment to events companies and consumer tech gadgets, saw operating profits fall almost 16 per cent in the group’s financial year to the end of March, dragged down by weak household demand for tech products.
DCC also took a series of charges against assets in the division last year in an effort to restructure it and prepare it for sale.
The division booked a £52 million charge against the loss-making French and Iberian arms of its Exertis business, which distributes tech gadgets from home security cameras to wireless keyboards. It also agreed in April to sell two units for what it called “a modest consideration”, and exited small tech distribution businesses in the Middle East and Scandinavia.
DCC also took an almost £74 million goodwill impairment hit against its UK information technology business. A profit recovery in the business “has taken longer than expected”, it said, with market conditions “showing little signs of improving”.
The bulk of £37 million in restructuring costs racked up by DCC last year covered large “optimisation and integration” projects in its technology division in North America and the UK.
A number of analysts expect that DCC will sell the technology unit in two separate deals.
