DCC plc made an announcement today that it may sell DCC Technology — made up of Exertis Almo, Exertis Cloud, JAM, Exertis ZTORM, MTR, and Exertis Enterprise — within the next 24 months. Here’s the DCC CEO, Donal Murphy, explaining in a video the company posted today via its LinkedIn page:

So, how big is that division of DCC? Well, in 2024, they’ll likely do $5.6 billion USD globally — and with a profit margin of around 19%, that means its earnings will be right around $1 billion. In distribution, you can sell for multiples of 6x to 8x earnings so, the entire company (DCC Technology including all of Exertis and JAM) could be sold for between $6-8 billion USD.

So, who’s big enough to buy this without breaking it up? Well, TD SYNNEX is. However, it makes no sense to me for the company to buy Exertis. There is too much overlap in offerings and locations. Midwich may be too small for such an acquisition, but it would be a great play for them. That said, Midwich just acquired The Farm so I am not sure the company would want to deal with the financing of that magnitude right now. Wecso is a possibility as is ADI Global. ADI just acquired Snap One — a company that is nearly exclusively focused in high-end residential. So, adding DCC Technology would make them a global powerhouse in ProAV for sure. ADI is also big enough to buy Exertis, in my opinion.

I see the other option is to break them apart and sell DCC Technology in pieces. This may be why Murphy said they plan to sell off DCC Healthcare in 2025 but cited DCC Technology over a 24-month period of time. He may realize that DCC Technology is just too big for most companies or investment groups to buy all at once.

Of course, there’s always the possibility that Private Equity could decide to buy DCC Technology. We’ve seen a lot of PE investment in the ProAV space recently.

No matter what happens, the shareholders of DCC are happy today. Its stock has surged about 15% so far since the announcement this morning (as of this writing).

DCC Technology has some amazing people. I am sure they’re a bit nervous this morning. So, let’s show them some love ❤️. The truth is, this is a healthy company for someone (or some company) to buy but, it may be a while before we know what’s going to happen.