Belgian media reports over the weekend suggested Kingspan was set to swoop for Joris Ide, a producer of insulated panels for buildings which employs around 900 people, has operations across western and eastern Europe and revenues of over €430m.
Kingspan yesterday confirmed that it is in advanced discussions with the Belgian group to acquire the business, but added that there was no certainty that the negotiations will lead to a deal being done.
The report also suggested a potential transaction value of around €350m. While such a figure would be well within Kingspan’s funding capability, it is believed that such a price would be higher than the level at which any potential deal might be agreed.
“The newswould mark a period of increased deal flow for Kingspan and follows on from the Pactiv insulation business and Vicwest companies that were acquired in North America in recent months,” said David Holohan, head of research at Merrion Stockbrokers.
“Kingspan continues to have significant headroom with which to complete further deals, with net debt at the end of 2014 forecast to amount to €140m.
“The Vicwest deal is expected to close in the first quarter of 2015, leaving Kingspan with a pro-forma net debt early next year of €249m which is set against a full-year 2015 pro-forma earnings before interest, taxes, depreciation, and amortisation estimate of €225m, leaving management with significant headroom to complete further deals,” he added.
Davy Stockbrokers analyst, Flor O’Donoghue also welcomed the news.
“Our initial reaction is any acquisition by Kingspan of Joris Ide would be positively received. It would further consolidate the European insulated panels sector, increase Kingspan’s already leading market position and potentially provide a number of synergies — for example; scale gains and the opportunity to implement best practice,” he said.
The acquisition would complement Kingspan’s mainland European insulated panel business which has estimated sales of €500m after the Thyssenkrupp acquisition in 2012, said Robert Eason of Goodbody Stockbrokers.