The breakneck pace of DCC's (LON:DCC) acquisition programme shows no let up. At $293m, the purchase of ExxonMobil’s Norwegian petrol station network is its biggest yet. That suggests its strategy of picking up ancillary energy assets is taking on more urgency as oil prices rise. To be sure, scope to buy further high-quality assets in the space remains, as energy producers and less well-positioned services groups continue adjusting to the lower-cost environment.
However, we expect investors to increasingly query DCC’s RoIC assumptions as oil industry conditions recover, particularly given the group’s total debt as a proportion of underlying earnings is about 40% higher than that of its closest support rivals. For now though, investors remain on side in view of DCC’s growing niche in energy services among UK-listed support groups, synergies and benign financing costs (a 70 basis points advantage over rivals, according to Reuters data).
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.