DCC to offload environment division for £219m

Irish services company DCC is to sell its environmental division to Exponent, a private equity firm, for £219m, subject to regulatory approval.

The environmental division comprises of the UK-based businesses, William Tracey Group, Oakwood Fuels and Wastecycle, as well as its Irish business, Enva.

The sale is expected to complete by the end of June following clearance from Ireland’s competition authority.

This sale comes after DCC announced earlier on Wednesday that it is to buy Royal Dutch Shell's liquefied petroleum gas business in Hong Kong and Macau for about £120m (HK$1.16bn).

DCC Environmental, which treats and recycles non-hazardous and hazardous waste in Britain and Ireland, generated revenue of £153.5m and operating profit of £15.2m with a return on capital employed of 11.7% in the year ended 31 March 2016.

It represented about 5% of the DCC’s operating profit last year.

The FTSE 100 company expects to receive about £170m from the sale, as 25% of the British business are owned by a minority partner, and the proceeds will be used to fund the development of its energy, healthcare and technology divisions.

The deal is also anticipated to give rise to an exceptional £30m profit in the 2018 financial year.

Outgoing chief executive Tommy Breen, who is to retire in July, said the environment business has performed strongly in recent years and he expects it to continue to grow under Exponent’s ownership.

“The disposal of the environmental division brings sharpened strategic focus to the group and will allow DCC to concentrate fully on growing and developing the energy, healthcare and technology divisions where DCC has been actively deploying development capital in recent years,” he said.

Shares in DCC were up 1.85% to 7,150p at 1248 BST.