Distribution group DCC has increased the size of its oil and gas business by more than one third through the acquisition of BP's oil distribution division in Scotland and in parts of northern England for approximately €15 million (£11.8 million).

The acquisition will increase the turnover in DCC's energy business to more than €800 million.

The BP business has current sales of about €240 million and DCC expects to improve operating profits to about €2.5 million in the first year.

DCC already has oil and LPG sales of more than €600 million. The company operates in Ireland under the Emo brand for petrol and oil, and uses the Flogas brand for LPG in Ireland and the UK.

Operating profits from the division last year were €23.6 million.

This indicates that the existing energy operations had operating margins of 3.9 per cent last year, far higher than the 1 per cent margin that DCC plans to generate from the new Scottish business in the first year.

DCC Energy managing director Mr Kevin Murray said that operating margins are not necessarily the best measure in the energy business.

He added, however, that DCC would aim to progressively improve the margins from the Scottish business.

He added that DCC planned to build on the acquisition of the BP business in Scotland and target similar acquisitions in England and Wales.

The acquisition - which is worth €15 million between the cost of the assets and working capital requirements - involves the purchase of the trade, assets and goodwill of the BP business. The business will be rebranded as Scottish Fuels and employ 200 people.

The assets being acquired include nine storage depots - eight in Scotland and one in Northumberland - and a fleet of 90 road tankers.

The head office is in Falkirk in central Scotland with telesales centres in Inverness in the north and Dumfries in the south of Scotland.

DCC chief executive Mr Jim Flavin said: "The acquisition of the leading oil marketing and distribution company in Scotland is an important building block in our plans for the development of a significant oil marketing and distribution business over time.

"The British oil distribution market is fragmented and we plan further acquisitions which will complement this acquisition geographically."