DCC has announced plans to pay €19.3 million to acquire two new businesses, but the company also said yesterday that it would incur exceptional restructuring and legal costs of around €16 million in the current financial year.
DCC did not provide a breakdown of the once-off charge, but the costs associated with its legal battle with Fyffes form part of it.
The biggest element behind the exceptional charge is DCC's decision to restructure its supply chain management subsidiary, SerCom Solutions, by closing its loss-making Dublin facility with the loss of 220 jobs.
The business, which lost €900,000 in the last financial year, will be consolidated at SerCom's Limerick facility.
DCC said exceptional restructuring costs would also be incurred in connection with the integration of Shell Direct UK, which was acquired last year.
The costs associated with the Fyffes legal action come next on DCC's list, but are understood to represent just a small portion of the €16 million.
The company is also facing "modest" costs in pursuing collection of €18.8 million it was awarded in a legal action against a Taiwanese company in London's High Court last year.
Meanwhile, DCC announced two bolt-on acquisitions in its energy and healthcare divisions.
On the energy side, it is paying €8.9 million to buy a fuel card business, Dyneley Holdings.
Based in Leeds, Dyneley generates annual operating profits of around €2.8 million from selling motor fuels via fuel cards under the BP, Esso and Texaco brands.
"The acquisition of Dyneley further strengthens DCC Energy's position as the largest independent oil marketing and distribution business in the British market," DCC chief executive Mr Jim Flavin said.
DCC also announced plans to pay €10.4 million to acquire 77.5 per cent of Hampshire-based Laleham Healthcare, a contract manufacturer and packer of creams and other liquid products for the health and beauty market.
Laleham currently enjoys operating profits of around €4.3 million. "The Laleham deal is quite significant for the healthcare division, as we estimate it will add up to 30 per cent to the division's profit base," company broker Davy said.
DCC has also agreed an option to acquire the remaining 22.5 per cent of the company, which is currently held by senior management, for a maximum €7.1 million over the next three years.
Mr Flavin said the purchase of Laleham broadened the company's offering in this area and created opportunities to cross-sell products and services.
Analysts welcomed both acquisitions, which are expected to boost earnings. Goodbody estimates that the two acquisitions will add more than 4 cent, or 2.8 per cent, to full-year adjusted earnings per share, while Merrion is pencilling in a 5.7 per cent boost to EPS in 2006.
Shares in the company closed 10 cent higher at €17.55 last night.Yesterday's purchases bring to five the number of acquisitions made by DCC in the current financial year. In addition to Shell Direct UK, it acquired the British wine business Bottle Green last July.
The company also purchased the 48.5 per cent of Allied Foods that it did not already own in August.
