REG - DCC PLC - DCC plc acquires Almo Corporation

DCCAnnouncement

15/12/2021 07:00

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RNS Number : 6619V  DCC PLC  15 December 2021

 

15 December 2021

 

DCC plc acquires Almo Corporation in Group's largest acquisition to date

DCC Technology North America to more than double in size

DCC plc, the leading international sales, marketing, and support services
group, announces that DCC Technology completed the acquisition of Almo
Corporation ("Almo" or the "Business") on 14 December 2021. The acquisition
was based on an initial enterprise value of approximately $610 million (£462
million) on a cash-free, debt-free basis. The transaction represents DCC's
largest acquisition to date and materially expands DCC Technology's successful
and growing North American business. The Business was acquired in a bilateral
transaction from the Chaiken family, who have owned and managed Almo since its
foundation 75 years ago.

 

DCC has now committed c.£550 million to acquisitions in the financial year
ending 31 March 2022. DCC management will host a webcast at 9.00 am this
morning (details below) to provide an update on the Group's strategy and
development priorities, DCC's growth in North America and the acquisition of
Almo.

 

The acquisition of Almo is a major step in the continuing expansion of both
DCC and DCC Technology in North America. DCC Technology entered the North
American market in 2018 and since then has expanded significantly, through a
combination of strong organic growth and acquisition activity. Together with
DCC Technology's existing platform, the acquisition of Almo will create the
leading, specialist, Pro AV business in North America. The North American
market is the largest B2B and consumer technology market in the world and the
acquisition will enhance DCC Technology's presence and capability in the
consumer channel where Almo is also the largest national distributor of
consumer appliance and lifestyle products. It is led by a highly experienced
management team with a high-quality sales, marketing and operating
infrastructure.

 

Key Transaction Features:

·    Almo is a leading specialist sales, marketing and value-added
distribution business, operating across the B2B and consumer channels for Pro
AV, consumer appliances, consumer electronics and lifestyle products, with
revenue of approximately $1.3 billion1 (£1.0 billion).

·    By combining Almo's Pro AV offering with DCC Technology's existing
Pro AV operations, the synergistic acquisition will create the leading,
specialist, Pro AV business in North America.

·    The acquisition will significantly increase the scale of DCC
Technology's overall business in North America: on a pro-forma basis, DCC
Technology will have revenue of approximately $2.3 billion (£1.7 billion) in
the region.

·    The enlarged business will have increased management and operational
capability to be a consolidator in a fragmented, growing market.

·    Consideration based on an initial Enterprise Value, on a debt-free,
cash-free basis of c.$610 million (£462 million).

·    Underlying EBITA of c.$75 million(1) (£57 million).

·    Significantly EPS accretive, with adjusted EPS accretion of
approximately 10%2 in first full year of ownership.

·    The acquisition is expected to generate a return on capital employed
well above DCC's cost of capital from completion. It is expected to generate a
return on capital employed of 15% within three years.

 

The vast majority of the consideration was paid in cash on completion from
DCC's existing resources. The remaining consideration will be payable based on
a number of performance criteria over the periods to 31 March 2024.

 

1 Based on Almo's most recent financial year ended 30 April 2021

2 Based on DCC plc's year ended 31 March 2021

 

Almo:

Founded in 1945, Almo is a leading specialist sales, marketing and value-added
distribution business in the United States, selling to integrators, resellers,
dealers, retailers and e-tailers nationwide. Almo is one of the largest
specialist Pro AV businesses in the United States and is a leading national
distributor of consumer appliances, consumer electronics and lifestyle
products. The business is headquartered in Philadelphia and employs
approximately 660 people across the United States.

 

Almo is renowned in its market for providing excellent customer service and
has enduring customer and supplier relationships. Almo provides products from
many of the world's leading Pro AV and appliance manufacturers, including from
many of DCC Technology's existing partners in Europe. The Business operates
from several sales offices and from nine warehouse facilities across the
United States. Almo has nationwide distribution capability from its c.2.5
million square feet (230,000 square metres) of warehousing. Its footprint and
service level enables it to be a leading provider of e-commerce fulfilment
services.

 

Almo is aligned with the DCC culture of sustainable growth and has a plan to
be carbon neutral by 2024. The business has 740,000 square feet (69,000 square
metres) of warehousing space powered by solar energy.

 

Almo will continue to be led by its current CEO, Warren Chaiken. His
experienced and ambitious management team, which has a track record of
delivering strong organic and acquisitive profit growth, will also continue
with the business. DCC Technology's existing Pro AV operations in North
America will be combined with Almo to create the leading specialist Pro AV
business in the market.

 

In its latest financial year ended 30 April 2021, Almo recorded revenues of
$1.3 billion (£1.0 billion) and had underlying EBITA of $75 million (£57
million). Its gross assets at 30 April 2021 were $409 million (£310 million).

 

 

Donal Murphy, Chief Executive of DCC plc, said today:

 

"We are delighted to welcome Almo into the DCC Group and we would like to
thank the Chaiken family for choosing DCC as their partner for the next phase
of growth and development of the Business. The synergistic acquisition of Almo
more than doubles the size of our North American technology business. It will
create the leading, specialist Pro AV player in the US, as well as providing
the Group with real scale across the ecommerce and consumer channels, through
Almo's significant presence in the growing lifestyle, consumer appliance and
electronics markets.

 

The acquisition of Almo and other recent acquisitions in DCC Technology and
DCC Healthcare are consistent with our ambition to really scale our operations
in these higher growth sectors.  We are very pleased with the Group's
progress since we first entered the North American market in 2018, where we
have built substantial and successful businesses across the healthcare,
technology and energy sectors. We have great opportunity for future expansion,
given the platforms we've created, the attractive growth dynamics and the
scope for consolidation."

 

 

Presentation - audio webcast and conference call details:

DCC will host an audio webcast and conference call for analysts and
institutional investors at 09.00 GMT today, Wednesday 15 December 2021. The
presentation will provide an update on the Group's strategy and development
priorities, DCC's growth in North America and the acquisition of Almo. The
slides for this presentation can be downloaded from DCC's website: www.dcc.ie.
The access details for the presentation are as follows:

 

Ireland: +353 (0) 1 536 9584

UK: +44 (0) 2039 362 999

International: +44 (0) 2039 362 999

Passcode: 935642

 

Webcast Link: https://www.investis-live.com/dcc/61b1f5bcb81c4712006b3d6e/gevx
(https://www.investis-live.com/dcc/61b1f5bcb81c4712006b3d6e/gevx)

A replay of the webcast and transcript will be made available at www.dcc.ie
(http://www.dcc.ie) shortly after the event.

 

 

Contact information

 

Investor enquiries:

Kevin Lucey, Chief Financial Officer
 
                Tel: +353 1 2799 400

Rossa White, Head of Group Investor
Relations
                Email: investorrelations@dcc.ie
(mailto:investorrelations@dcc.ie)

 
Web: www.dcc.ie

 

Media enquiries:

Powerscourt (Eavan Gannon/Genevieve
Ryan)
                           Tel: +44 20 7250 1446

                      Email: DCC@powerscourt‐group.com

 
 

 

 

 

Note:

This announcement contains inside information for the purposes of the UK
version of Regulation (EU) No. 596/2014 on Market Abuse.

 

About DCC plc

DCC is a leading international sales, marketing and support services group
with a clear focus on sustainable growth. DCC is an ambitious and
entrepreneurial business operating in 21 countries, supplying products and
services used by millions of people every day. Building strong routes to
market, driving for results, focusing on cash conversion and generating
superior sustainable returns on capital employed enable the Group to reinvest
in its business, creating value for its stakeholders.

Headquartered in Dublin, the Group operates across three sectors: energy,
healthcare and technology, employing approximately 15,000 people. DCC plc is
listed on the London Stock Exchange and is a constituent of the FTSE 100. In
its financial year ended 31 March 2021, DCC generated revenue of £13.4
billion and operating profit of £530.2 million.

DCC has an excellent record, delivering compound annual growth of 14% in
operating profit and generating an average return on capital employed of
approximately 19% over 27 years as a public company.

About DCC Technology

DCC Technology is a leading sales, marketing and value-added services partner
for global technology and lifestyle brands. DCC Technology, which principally
trades under the Exertis brand, provides a broad range of technology and
lifestyle products and services to customers across the consumer, B2B and
enterprise markets. It operates in 19 countries with its principal operations
in the US, Canada, the UK, Ireland, France, the Netherlands, Sweden and the
United Arab Emirates.

 

 

 

 

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