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DCC buys Canada's Jam Group and unveils share placing plans

DCC raised further funds by placing 8.9mln shares as part of a drive to extend its geographic footprint and product range

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DCC has acquired Canada-based musical instruments distributor, Jam Group

DCC Plc (LON:DCC) has acquired musical instruments distributor Jam Group and raised more than £600mln through a share placing which it plans to use to drive its acquisition strategy.

The oil distribution, tech and health and beauty products conglomerate, on Thursday said it expected the purchase of Canada-based Jam, which it said has an enterprise value of around £130mln, to generate a return on capital employed of around 15% in the first full year of ownership and boost earnings per share by 4.5%.

READ: DCC confident of another year of growth as it unveils two acquisitions

"The acquisition of Jam significantly strengthens DCC Technology's position in the North American market. DCC Technology now has approximately US$600 million in revenue in North America with a strong, service-led, specialist focus on professional audio and visual, musical instruments and consumer electronics,” CEO Donal Murphy said in a statement.

“The growing and fragmented nature of these markets will provide DCC Technology with further opportunities for development in the coming years,” he added.

DCC also said it had raised gross proceeds of around £606mln - before expenses - from a placing of 8.9mln new shares at a price of 6,800p with institutional investors. It plans to use the proceeds to further extend its geographic footprint and product range, strengthening its partnership with existing suppliers while also broadening its base of customers and suppliers.

The placing shares represent around 10% of DCC's issued share capital, prior to the placing, DCC said.

The company, which operates in 17 countries, also said that its first-half profit would be in line with its expectations and well ahead of the same period a year ago, driven by the impact of previous acquisitions and good trading across its divisions.

DCC reiterated its belief that the year ending 31 March 2019 would be another year of “profit growth and development" for the company. 

Shares in DCC were 4.3% down at 6,995p in late afternoon trade. 

-- updates lead and summary to reflect completion of placing, commentary on placing and share price -- 

Quick facts: DCC PLC

Price: 6298 GBX

LSE:DCC
Market: LSE
Market Cap: £6.2 billion
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