Kingspan must identify bid partner - Recticel
Kingspan's offer of €700m for two divisions of Recticel is "lacking critical information items", the Belgian group has said. It wants to know who Kingspan plans to sell one of the divisions to, and for how much.
Cavan-headquartered Kingspan earlier this week made a bid for Recticel's Insulation and Flexible Foams business.
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Kingspan said it has already entered into an exclusive back-to-back agreement with a third party who will buy Recticel's flexible foams businesses, should the initial deal go ahead.
However, yesterday Recticel said it was seeking information and clarification on a number of items, including clarification on anti-trust risks associated with the potential deal and reduction of such risks.
It wants information on the identity, rationale, any competition risks, and price in respect to the back-to-back agreement to sell the foams business, as well as clarity on the implications for Recticel's shareholders of a potential deal with Kingspan.
Once it receives this information the board of Recticel will review the offer further.
Kingspan refused to comment on Recticel's request.
Should the deal go through it would tighten Kingspan's grip on the European insulation market, adding Recticel's manufacturing units in Belgium, France, Britain and Slovenia.
Robert Eason, analyst at Goodbody, said the potential deal makes "strategic and financial sense for Kingspan."
"However it is important to note that this potential transaction is at a very early stage in the process and as such, we can expect some back-and-forth near term, with consummation of any deal likely being in 2020," Mr Eason added.
It is likely the group will use a mix of existing cash reserves and debt to fund the proposed acquisition. Last year Kingspan spent €472.3m on acquisitions, including the Spanish Synthesia Group, its first manufacturing presence in Southern Europe.
Shares in Kingspan were up 1.3pc in afternoon trading yesterday. Since the possible deal was first reported on Tuesday, Kingspan's share price has reacted positively with the stock closing at over €45 for the first time.