DUBLIN, June 29 (Reuters) - An American fund manager holding a stake in DCC DCC.I has written to its management demanding measures to break up the Irish business services company, the Sunday Times newspaper reported.
ReachCapital, which has built a 1 percent stake in DCC on behalf of clients, said DCC shares were undervalued due to its “conglomerate” nature and the distraction caused by a share dealing case with fruit company Fyffes FFY.I, the paper said.
DCC (DCC.L) spokesmen were not immediately available to comment.
The fund said it may explore “external alternatives” if the board does not take immediate steps to maximise shareholder value. The alternatives could include seeking support from other funds or soliciting buyers for the company’s assets.
“We must insist that the company retains a reputable investment banking firm and promptly sets forth a plan to fully monetise the company’s assets,” ReachCapital Managing Partner Nigel Hart wrote in a letter to DCC Chief Executive Tommy Breen.
The “monetisation” of assets would be achieved through spin-outs of DCC’s various businesses into separately quoted companies or the sale of the companies, the paper said.
DCC, whose activities range from distributing liquefied petroleum gas to manufacturing cosmetics, in April paid 41 million euros ($64.5 million) to settle a share dealing case with Fyffes, prompting the exit of chairman Jim Flavin in May.
Ireland’s Supreme Court ruled last July that Flavin held price sensitive information in 2000 when the company sold a stake in Fyffes a month before it issued a profit warning. Fyffes brought the case against DCC and Flavin, who was a director of Fyffes at the time.
Flavin, who founded DCC in 1976, resigned after the Irish Director of Corporate Enforcement, which has the power to prosecute persons for suspected breaches of the Companies Acts, said it wanted to start a new investigation into the case.
Reporting by Andras Gergely; Editing by Ruth Pitchford