NEW YORK ( TheDeal) -- Irish conglomerate DCC has struck its biggest ever deal, agreeing to pay €464 million ($519 million) for Butagaz, the French liquefied petroleum gas unit of Royal Dutch Shell (RDS.A).
The acquisition will secure for DCC a 25% market share in Western Europe's second largest LPG market. It follows DCC's purchases of LPG assets from BP (BP) and Statoil (STO) in 2012 and is DCC's second deal in France in less than a year after it agreed to pay $140 million for Exxon Mobil's (XOM) French service station network in August.
"The acquisition of Butagaz represents a major step forward in DCC's ambition to build a very significant presence in the global LPG market," DCC CEO Tommy Breen said in a statement.
The price tag of €464 million, which will be adjusted for items like stock on hand, values Butagaz at about 3.3 times its underlying Ebitda of €123.6 million for 2014. DCC will part-fund the acquisition with the sale of as much as 4.2 million new shares, equating to about 5% of its existing share capital.
Butagaz, headquartered in the Parisian suburb of Levallois, operates ten bulk depots and eight filling plants across France. The sale is an easy carve-out for Shell, which runs Butagaz as a standalone operation with its own marketing, distribution and back office functions.
"The transaction is consistent with Shell's strategy to concentrate its downstream footprint on a smaller number of assets and markets...and is part of an on-going exit from the LPG business globally," said Shell.
Dublin-based DCC describes itself as a sales, marketing and distribution business. Its largest operation is the DCC Energy unit, which will acquire the Butagaz business, though it also has technology, healthcare and environmental businesses.
DCC acquired BP's UK LPG operations in 2012 for $63 million and months later snapped up Statoil's industrial LPG business in Sweden and Norway for an undisclosed fee.
The Butagaz deal is expected to close during the final quarter of this year, but the companies must first consult with Butagaz Works Councils.
DCC shares traded in London on Tuesday at 4,814 pence ($74.78), up 424 pence, or 9.7%, on their Monday close.