DCC plc (LON:DCC), the leading international sales, marketing, and support services group, has announced that it has recently completed the acquisition of United Propane Gas, materially expanding its presence in the US LPG market.
UPG is DCC LPG’s largest acquisition since initially entering the US market in April 2018 and follows the material bolt-on acquisitions of NES Group in September 2020 and Pacific Coast Energy in April 2019. It is a further significant step in the execution of the strategy to build a business of scale in the highly attractive and growing US LPG market. The acquisition will considerably expand DCC LPG’s geographic presence from 14 to 21 states, will almost double its customer base to over 230,000 customers and the combination will create the sixth largest business in the highly fragmented US LPG market1.
UPG markets, sells and delivers LPG and related products and services to residential, agricultural and commercial customers in 13 midwest and southern states, with a particularly strong presence in Kentucky, Tennessee and Alabama. Headquartered in Paducah, Kentucky, the Business employs approximately 360 people, has over 110,000 active customers and sells approximately 120,000 tonnes of LPG annually from 80 operating locations. Approximately two-thirds of annual volume are sold to residential customers, with the balance sold to agricultural and commercial customers. UPG’s operations are well invested and largely contiguous to DCC LPG’s existing operations.
Together with a recent smaller bolt-on acquisition completed in Colorado, the combined enterprise value of the transactions was $145 million. The consideration was paid in cash on completion from DCC’s extensive resources. The acquisitions will be earnings enhancing from completion and the after-tax cash payback will be approximately nine years.
Donal Murphy, Chief Executive of DCC plc, said today:
“The acquisition of UPG is another exciting development for DCC and is and is consistent with our ambition to build a substantial presence in the global LPG market. Since our initial entry into the US LPG market in April 2018 we have now committed approximately $445 million of acquisition capital in building DCC Propane into the sixth largest business in the market. Building a business of scale in the US LPG market provides DCC with a strong platform to provide our customers with their energy needs now and into the future. Following the acquisition of UPG we have a business of real scale with a presence in 21 states, employing over 800 people and serving the energy needs of over 230,000 customers. Notwithstanding this growth, the opportunity for further expansion remains significant and UPG will further enhance our platform for development in the large, highly fragmented, and growing LPG market in the US.”
