Saturday 25 May 2019

Recticel rejects Kingspan's €700m offer

Kingspan CEO Gene Murtagh
Kingspan CEO Gene Murtagh
Ellie Donnelly

Ellie Donnelly

Belgian group Recticel has rejected Kingspan’s €700m offer for its insulation and flexible foams divisions.

Recticel said the offer “significantly underestimates” the  standalone value of the insulation and flexible foams businesses.

The board of Recticel added that, were the deal to go through, it would render the company “an  unattractive proposition” for shareholders and employees.

In addition, it said it has concerns in relation to Kingspan’s back-to-back agreement with Austrian group Greiner for the foams business.

Recticel added that it was approached by Kingspan in relation to a possible offer for the whole group at €10 per share earlier this year, but that it decided at the time not to further engage with Kingspan on this.

However, the group said it remains open to engage with Kingspan to discuss a possible acquisition of all of the stock of Recticel.

Kingspan responded to the news with a very brief statement saying “it notes the statement from Recticel earlier today. We note the comments and views expressed and have nothing further to add.”

Flor O'Donoghue, analyst at Davy Stockbrokers, said it was "no great surprise" the offer had been rejected.

"However, the door has not been slammed shut, although Kingspan’s reaction is that it has “nothing further to add,” " Mr Donoghue said.

Recticel's flexible foam business had sales of €621.5m in 2018, while it reported earnings before interest, taxation, depreciation, and amortisation (ebitda) of €33m in the division.

Meanwhile its insulation business, which Kingspan had intended to hold on to, had sales of €271.2m and ebitda of €44.7m for the year.

Last year Kingspan - which is headed by CEO Gene Murtagh - spent €472.3m on acquisitions, including Synthesia Group, its first manufacturing presence in Southern Europe.

In 2018, Kingspan generated record income of almost €4.4bn and trading profit was €445.2m for the year.

Had the deal went through it would have tightened Kingspan’s grip on the European insulation market, adding Recticel's manufacturing units in Belgium, France, Britain and Slovenia.

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