DCC considers the value of simplicity over diversification

It's all fun and games at the distributor as decisions are made about divestment, says Billy MacInnes

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Tim Griffin, Exertis

The game’s afoot.

Before we go any further, let’s briefly digress to ask ourselves what kind of game afoot would be. I mean, really? One foot? Sounds pretty limited to me.

Anyway, as Sherlock Holmes was wont to say, “the game’s afoot”, in this instance regarding the future of Exertis, the distributor which includes what was, many moons ago, Sharptext.

The company’s owner is DCC, the business founded by Jim Flavin in 1976 and led by him until retirement in 2008. Back in 1988, DCC invested in Sharptext, which grew to become Ireland’s largest IT distributor, and Micro-P in the UK, two companies which would form the backbone of Exertis.

The Irish operation eventually grew to include Sharptext, Arc Telecom, MSE and SerCom Solutions. They were all brought under the Exertis brand 11 years ago in November 2013.

Since then, the DCC Technology operation has expanded to 21 countries, located across Europe, North America, Asia-Pacific and the Middle East.

In its most recent results for the six months ending 30 September 2024, DCC Technology reported revenue of £2.3 billion with an operating profit of £38.5 million. The business is divided into Pro Tech, which covers AV products, and Info Tech for high-volume consumer and business IT products.

The statement accompanying the results highlighted that “the business in Ireland performed well in the first half of the year”.

DCC has taken the decision to simplify its operations to focus on its energy interests, stating that the “energy business and related opportunity in energy transition presents the largest growth opportunity, at strong returns, available to the Group”.

It has already begun preparations for the sale of DCC Healthcare, which should be complete in 2025.

Get with the programme

On the subject of DCC Technology, the company said it would review its strategic options for the business, “following completion of its value enhancing operational improvement programme, within the next 24 months”.

In a statement provided to MicroScope, Tim Griffin, CEO of Exertis IT (pictured), was more explicit about the possibility of a sale. “We’re excited by the opportunities that DCC’s strategic update presents. This is a great opportunity for our Technology division as we explore the possibility of new ownership.”

He stressed that the focus of the division was “on delivering for our customers and vendor partners. DCC’s strategic update provides another opportunity for us all to grow and progress, and we’d like to reassure our customers and vendors of our commitment to them, to adding value, to delighting all our partners and enabling their success”.

It’s going to be interesting to see what happens here. DCC Technology is an approximately £5 billion business, so it’s not to be sniffed at. In DCC’s last full year results for the 12 months ending 31 March, the technology operation had revenues of £4.8 billion after it “experienced more difficult market conditions and declined organically”.

Two years seems like quite a long deadline to set for divesting of a business. While it sends a clear signal to potential buyers that this is not a fire sale, it also prolongs the period of potential uncertainty over the future ownership of the technology operation.

We shall wait and see how this story develops, but it’s definitely got legs.

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