Sunday 18 August 2019

Kingspan's latest bid for Recticel rejected by Belgian company

Irish insulation giant looks set to give up on buyout attempts as offer is judged 'not sufficiently compelling' by target

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Stock photo
Ellie Donnelly

Ellie Donnelly

Kingspan made a renewed approach on Tuesday to buy all of Belgian foam maker Recticel, in the latest in a series of what now look like failed bids for some or all of the business.

The latest proposed acquisition was revealed in a statement from Recticel where it rejected a separate €700m bid from Kingspan for part of the company and amid signs of increasing rancour between the companies.

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Recticel yesterday formally rejected Kingspan's €700m offer made on April 16 for two of its units, as relations between the two companies showed increasing strain.

In a lengthy statement to the market yesterday, Recticel said it had also rejected a €10-per-share offer from Kingspan for the entire company earlier this year, saying the bid was "not sufficiently compelling".

Kingspan's bid of €10 a share for the entire Belgian company made earlier this year adds up to €552m in equity, with Kingspan taking on around €150m in debt, as well as pension liabilities.

However, Recticel said it remains open to discussions with Kingspan on the possible sale of the entire group.

Yesterday shares in Recticel, which in 2018 made a profit of €28.8m, were trading at around €8.76, having fallen over 2.3pc.

The board of Recticel "unanimously" rejected Kingspan's €700m offer for its insulation and flexible foams divisions, saying the offer "significantly underestimates" the standalone value of the two businesses, the company said.

Were the deal to go through, it would render the remaining company "an unattractive proposition" for shareholders and employees, it said.

In addition, Recticel said the offer posed regulatory risks, "for which Kingspan has not proposed adequate solutions."

Recticel also cited concerns in relation to Kingspan's back-to-back agreement with Austrian group Greiner for the foams business.

Kingspan responded with a brief statement yesterday saying "it notes the statement from Recticel. We note the comments and views expressed and have nothing further to add."

Davy Stockbrokers analyst Flor O'Donoghue said the Irish company looks set to walk away.

"This can be interpreted that Kingspan will not be making any further revised offer in relation to Recticel. The possibility of a transaction is almost certainly finished.

"It is disappointing in that there were clear merits to a Kingspan-Recticel insulation combination. However, it highlights Kingspan's discipline," Mr O'Donoghue added.

Shares in Kingspan were little changed in afternoon trading yesterday.

Irish Independent

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