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Kingspan broadens North America footprint with €109m purchase

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Kingspan's CEO Gene Murtagh.

Kingspan's CEO Gene Murtagh.

Kingspan's CEO Gene Murtagh.

Cavan-based insulation maker Kingpsan has agreed to pay C$154m (€109m) for a unit of Canadian group Vicwest that further extends its footprint in North America.

Kingspan, which is headed by chief executive Gene Murtagh, said that its acquisition of Vicwest's building products unit will boost the Irish company's ability sell more energy-efficient insulation panels to the North American construction market.

Quoted on the stock market, Vicwest's building products division has three insulation panel manufacturing plants, as well as a number of other facilities in Canada and the United States.

The price agreed by Kingspan includes debt and reorganisation expenses and is payable in cash on completion.

The Canadian business generated revenue last year of C$253.7m (€180m) and pro-forma earnings before interest, tax, depreciation and amortisation of C$12.2m (€8.6m), which is expected to hit C$15m this year.

Vicwest's board has agreed to sell the entire group for a total of C$376m, with both Kingspan and Canada's AG Growth International splitting the company between them. Kingspan is buying the building products unit, while AG is buying Vicwest's Westeel division.

Kingspan's acquisition is expected to close in the first quarter of 2015. The Irish firm's products are used in a range of construction activity, from food service premises, retail outlets, office blocks, airports to residential schemes.

David Holohan, the head of research at Merrion Capital, said that the deal marks further expansion of Kingspan's operations in America, where it recently completed the acquisition of the Pactiv insulation business in the United States.

Last year, Kingspan generated 13pc of its €1.79bn in sales in the US - a figure that is expected to rise to 25pc within a few years.

Mr Holohan said the increase should coincide with ongoing recovery in the US residential construction market, in addition to non-residential construction recover that he said is only just getting underway there.

Mr Holohan has raised his price target for Kingspan shares to €14.50. They were trading at around €12.86 yesterday.

Mr Murtagh said earlier this year that Kingspan has the financial headroom to spend about €500m on acquisitions.

Irish Independent