DCC Plc: Divest, Clarify, Capitalise
A high quality, UK-listed break-up situation offering ~95% upside.
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In this issue of the newsletter, I outline another very interesting break-up event situation, this time involving UK-listed, FTSE 100 conglomerate DCC Plc (DCC).
Long-regarded as a high-quality, serial-acquirer, DCC’s share price has stalled in recent years as investors lost interest in the stock amid concerns around the prospects for its Energy division and headwinds impacting its smaller Healthcare and Technology businesses. However, last Tuesday management surprised the market with the news that it intends to break-up DCC’s long-standing conglomerate structure to focus on its highest-growth, highest return division, DCC Energy.
The break-up has the potential to unlock significant value for shareholders, with management stating that surplus cash will be returned to shareholders, and should reposition the stock for a market re-rating as a simplified energy story.
So let’s take a look at the implications of a break-up for DCC’s equity value, and examine why this situation is so interesting now…