Kingspan unlikely to table fresh bid for Belgian company

Kingspan is not expected to make a revised offer for Belgian company Recticel despite the latter being open to a higher offer.

The Belgian company has rejected Kingspan's €700m offer for its insulation and flexible foams divisions, which was tabled last week, on a number of grounds but most notably because it viewed the offer price as being "inadequate".

In reply, the Cavan-based building insulation group said it noted Recticel's comments and views, but had "nothing further to add".

It is understood that Kingspan had initially held talks over a bid for Recticel's entire business, before switching its focus to just the two aforementioned divisions. Recticel has claimed that Kingspan returned its attention to the entire business in recent days with a €10 per share offer.

Recticel also said it was concerned with Kingspan having an agreement in place to sell-on the flexible foams business to Austrian company Greiner. However, no deal now seems likely.

We understand that Kinsgpan will not be making any further revised offer for Recticel.

"Hence, the possibility of a transaction is almost certainly finished," said Davy analysts Flor O'Donoghue and Robert Gardiner.

"It is disappointing in that there were clear merits to a Kingspan-Recticel Insulation combination, a disappointment that may well be shared by many Recticel shareholders given what the offer implied relative to the undisturbed valuation of the group.

"However, it highlights Kingspan's discipline and, given the short timeline of developments,should not have been too much of a drag on management time and resources," they said in a research note.

Kingspan is expected to report a strong first quarter trading performance when it updates to coincide with its agm next Friday.

Speaking in February on the back of a strong set of 2018 annual results - which saw a 17% rise in pre-tax profit and the group breaching the €4bn mark in revenues for the first time - chief executive Gene Murtagh said the company was eyeing more acquisitions in mainland Europe and described the deal pipeline as being "very healthy". However, he described the European M&A market as being "very unpredictable".

Kingspan continues to have a vast opportunity set for investment, which is increasing as the group's operating network globalises.

"We are hopeful that there will be some interesting developments over the remainder of the year," said the Davy analysts.

Kingspan shares - up nearly 24% in the past 12 months - fell by close to 1% after news of the failed Recticel bid.

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