Goodbody Stockbrokers analyst David O'Brien has said that should DCC choose to sell its Food & Beverage division, it would "free up the capital tied up in the business and allow management to focus on the core businesses of the group."
The Sunday Times reported at the weekend that DCC has hired investment bank Stamford Partners to 'explore options' for the division, including a potential sale.
"The division’s return on capital employed came in at 11.8% in FY14 up from 9.5% in FY13 and continues to be a drag on group returns (16.3%). As such, management had taken the strategic decision to avoid deploying growth capital to the business," said O'Brien.
As The Sunday Times article pointed out, 'food has become a marginalized activity within DCC group, as it has expanded rapidly in the fuel and IT distribution markets'.
DCC Food & Beverage, which posted revenue of £186.9 million last year, includes brands such as Kelkin, Goodalls, Robert Roberts, YR and the Findlater wine business, It also includes the Allied Foods logistics operation.
Valeo Foods is thought to be a likely suitor for some of the brands in the portfolio, in the event of a sale, however the CapVest-backed group could run into competition issues over DCC's sauce brands. A number of UK-based private equity groups are also thought to be interested.
DCC had no comment to make when contacted by Retail Intelligence.
