DCC expands presence in US propane market

January 12, 2021 By    

DCC LPG completed the acquisition of Kentucky-based United Propane Gas (UPG), materially expanding its presence in the U.S. propane market.

UPG is DCC LPG’s largest acquisition since initially entering the U.S. market in April 2018 and follows the material bolt-on acquisitions of NES Group in September 2020 and Pacific Coast Energy in April 2019.

The acquisition will considerably expand DCC LPG’s geographic presence from 14 to 21 states and will almost double its customer base to more than 230,000 customers. The combination will create the sixth-largest business in the highly fragmented U.S. propane market based on volumes, according to DCC LPG.

UPG markets, sells and delivers propane and related products and services to residential, agricultural and commercial customers in 13 Midwestern and Southern states, with a particularly strong presence in Kentucky, Tennessee and Alabama. Headquartered in Paducah, Kentucky, the business employs about 360 people and serves more than 110,000 active customers from 80 operating locations.

About two-thirds of annual volume are sold to residential customers, with the balance sold to agricultural and commercial customers.

UPG’s operations are well-invested and largely contiguous to DCC LPG’s existing operations, according to DCC LPG.

Combined with a smaller bolt-on acquisition completed in Colorado, the combined enterprise value of the transactions was $145 million. The consideration was paid in cash on completion. The acquisitions will be earnings enhancing from completion, and the after-tax cash payback will be approximately nine years, according to DCC LPG.

“The acquisition of UPG is another exciting development for DCC and is consistent with our ambition to build a substantial presence in the global LPG market,” says Donal Murphy, chief executive of DCC PLC. “Since our initial entry into the U.S. LPG market in April 2018, we have now committed approximately $445 million of acquisition capital in building DCC Propane into the sixth-largest business in the market.”

DCC LPG currently operates in 10 countries in Europe, the U.S. and Asia.

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