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Investing.com -- Shares of DCC plc (LON:DCC) fell by 3.7% following the announcement of its healthcare division’s sale to HealthCo Investment Limited for £1,050 million.
The deal value came in below the £1,300 million anticipated by Jefferies.
Although the sale represents 21% of DCC’s market capitalization, the healthcare division only contributed 13% to the group’s EBITA, suggesting a strategic move to streamline the company’s focus towards its Energy business.
The transaction, which is expected to close in the third quarter of this calendar year, values the healthcare division at 12 times its forecasted FY24 EV/EBITA, slightly under industry expectations, reflecting the challenging market conditions.
The net cash proceeds, estimated at around £945 million, account for roughly 19% of DCC’s market cap, inclusive of a £130 million unconditional deferred payment due within two years.
RBC analysts commented on the deal, stating, "It is positive news that the deal has been executed in this environment and positive that the disposal has been completed in one go. However, the price is lower than expected and mathematically the lower proceeds would knock 280p off our SOP valuation. However, we would note that post the recent weakness, the shares are trading well below our 6000p target price and we continue to see the Energy business as undervalued within the shares today."
Despite the sale price falling short of expectations, the strategic divestiture is seen as a step towards unlocking value within the group, with the sale of DCC’s Tech division anticipated in 2026 and ongoing evolution in disclosure as the company transitions to a pure-play Energy business.