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06 October, 2011
Dealers in the dark as Irish company DCC reaches conditional agreement to buy Total's distribution assets from Rontec Investments. By merril boulton
Page 10 

Last month many Total dealers were shocked to learn that contract completions permitting their supply arrangements will soon come under the control of a company many had never heard of.

Their surprise although some had heard rumours followed the news release, issued on September 23, that DCC plc, the sales, marketing, distribution and business support services group, which owns Gulf Retail in the UK, had reached conditional agreement with Rontec Investments Gerald Ronson's Snax 24-led consortium to acquire certain oil distribution assets currently owned by Total in Britain, the Isle of Man and the Channel Islands.

Rontec reached conditional agreement in June 2011 to purchase the distribution assets as part of a larger transaction with Total. DCC's acquisition is conditional on Rontec completing its transaction with Total, which is expected to take place at the end of October. The Total businesses included in the deal employ 550 people, sold 1.5bn litres of fuel in 2010, and include:

*The trade, fixed assets, stock and goodwill of Total Butler, a transport, commercial and home heating oil distribution business with sales volumes in 2010 of 670 million litres. Total Butler has a network of 40 depots across England and Wales and a fleet of circa 200 leased delivery vehicles.

*Contracts to supply transport fuels to circa 300 dealer owned dealer operated retail service stations (currently branded Total). Volumes sold under these contracts in 2010 amounted to 710 million litres.

*The entire issued share capital of Total's oil distribution and retail service station businesses on the Isle of Man and the Channel Islands. In 2010, together these businesses sold 120 million litres of fuel.

The expected total consideration payable by DCC for the businesses, together with the estimated value of stock to be acquired is 67m (59m), and will be satisfied in cash at completion.

Tommy Breen, chief executive of DCC, said: "This acquisition represents a further significant step forward in DCC's growth strategy in oil distribution in Britain.

It will considerably extend DCC Energy's presence in England and Wales and will also enhance our ability to serve customers throughout the market."

The agreement coincided with the recently announced acquisition by GB Oils of Pace Fuelcare Ltd, which is still to be ratified by the OFT.

GB Oils Ltd, a wholly owned subsidiary of DCC plc, currently supplies fuel to 815 independent UK dealers under brands including Gulf and Texaco. These latest acquisitions will add circa 300 Total, 140 Pace and 100 Power-branded filling stations to its portfolio, making it the UK's largest independent petrol retailer, with over 1,300 outlets.

Total dealer Peter Hockenhull, of Leicestershire-based Hockenhull Garages, said he'd heard nothing about the acquisition, and had never heard of DCC.

"I am extremely shocked. There has been no dialogue with anyone whatsoever. There should have been some consultation with the dealers over what was going on," he said. Like many dealers he was very concerned about what would happen to the Total brand.

"What polesign will we be displaying? As far as we're concerned we entered into a five-year supply agreement based on the credibility and pull of the Total brand. If we have to display some Mickey Mouse polesign then we will definitely be looking to take action. We've got break clauses after three years. The brand affects our credibility with our customers."

Susie Hawkins of the Simon Smith Group, had also not been officially informed about the acquisition, although, like many in the industry, she had heard plenty of rumours.

"I've had no official information, and it seems we are powerless to do anything about the fact the Total operation is being moved from one company to another in such a short space of time. I don't like not having any control over the situation.

"I would seriously weigh up the pros and cons of having my own brand. I certainly want to know what's going to happen with the Total brand."

Meanwhile, Keith Jewers, director of retail for GB Oils which operates the Gulf brand has been trying to reassure Total dealers of the type of operation they will be moving into: "Since the announcement of the DCC acquisition, we have had many questions from dealers," he said. "We are pleased to explain to Total and Power dealers that they will be working alongside people who understand the dealer market, who have a long-term commitment to the UK and who also have the facility to properly support the independent petrol retailer.

"Any change is naturally going to prompt questions," continued Jewers. "And these are welcome. We expect the DCC deal to be completed by November. Dealers will then see a very positive approach from the GB Oils team. With more than 1,400 supply outlets in the UK, GB Oils is most definitely a major player in the market. We believe in face-to-face relationships, our team understands the dealer market, they respect what has gone before and will work alongside dealers of all sizes to safeguard their long term prosperity. We fully intend to listen to dealers." "Despite being a national company supplying dealers from the Shetlands to the Isle of Wight independent dealers are extremely important to us. We are fully dealer focussed, offering speedy decision making based on commercial decisions."

GB Oils Limited, a wholly owned subsidiary of DCC plc, has already provided the impetus for Gulf to become the fastest growing forecourt brand in the UK. It has done so by improving the brand's supply chain across the UK and by strengthening its dealer support package. In 2011, Gulf achieved an almost 100% success rate on re-securing existing business and signed more than 90 new dealers including many from the UK's major oil companies.

"Any change is naturally going to prompt questions," continues Jewers. "And these are welcome. We expect the DCC deal to be completed by November. Dealers will then see a very positive approach from the GB Oils team. With more than 1400 supply outlets in the UK, GB Oils is most definitely a major player in the market. We believe in face to face relationships, our team understands the dealer market, they respect what has gone before and will work alongside dealers of all sizes to safeguard their long term prosperity. We fully intend to listen to dealers, to be flexible and committed to ensuring they and we are successful together."

DCC Group plc

DCC plc based in Blackrock, Co Dublin, Ireland is a broadly-based Irish group, operating across five focused divisions: DCC Energy, DCC SerCom (IT and entertainment products), DCC Healthcare, DCC Environmental and DCC Food & Beverage.

It currently employs around 8,000 people and is listed under Support Services on the Irish and London stock exchanges. The company's strategy is to grow a sustainable, diversified business through concentrating on those activities where it has established, or has the opportunity to establish, leadership positions (typically number one or two) in its chosen markets.

DCC Energy

DCC Energy is the leading oil and liquefied petroleum gas (LPG) sales, marketing and distribution business in Britain and Ireland and one of the leading oil distribution businesses in Austria and Denmark. In the year ended March 31, 2011, DCC sold 7.1 billion litres of product to around 800,000 customers from its network of 261 facilities.

DCC Energy:

currently employs approximately 3,500 people.

its oil distribution business supplies transport fuels, heating oils and fuel oils to commercial, domestic, agricultural and industrial customers in Britain, Ireland, Austria and Denmark.

sells oil under a portfolio of strong brands including Bayford, Brogan, Carlton Fuels, CPL, Emo Oil, Gulf, Scottish Fuels, Shell and Texaco.

is the largest oil distributor in Britain, selling approximately 4.4 billion litres of product per annum on a proforma basis which gives DCC approximately 14% of the market.

has been a consolidator of the highly fragmented oil distribution market in Britain having first entered the market in September 2001 with the acquisition of BP's business in Scotland.

is one of the largest oil distributors in Austria and Denmark with respective market shares of 12% and 13%. In Northern Ireland, DCC Energy is the largest oil distributor with a market share of approximately 20%, while in the Republic of Ireland DCC Energy has approximately 6% of the market.

is the second largest LPG sales, marketing and distribution business in Britain and Ireland. The LPG business supplies propane and butane in both bulk and cylinders to domestic, commercial, agricultural and industrial customers for heating, cooking, transport and industrial processes. Trading under the Flogas brand, DCC has approximately 19% of the market in Britain and approximately 37% of the market in Ireland.

is one of the leading sales and marketing businesses for branded fuel cards in Britain. The business now sells in excess of 500 million litres of motor fuel annually via its portfolio of fuel cards under the BP, Esso, Shell, Texaco, Total and Diesel Direct brands.

purchases its oil and LPG from the major oil companies with which it has established excellent long-standing relations.

its supply strategy is to maintain a portfolio approach to the sourcing of its oil and LPG products.

DCC's significant financial strength provides DCC Energy with a significant competitive advantage in building long-term partnerships with its suppliers.

Source: DCC website www.dcc.ie