Kingspan’s €700m offer for two Recticel divisions rejected

Kingspan's €700 million offer for two divisions of Belgian company Recticel has been rejected and the Cavan-based energy firm is unlikely to revise its offer, signalling an end to the process.

The Irish company had been seeking to acquire Recticel’s insulation and flexible foams business, a move that would have given it a commanding share of Europe’s insulation market.

However, Recticel said its board of directors had unanimously rejected Kingspan’s unsolicited bid and that it did not believe it was in the interest of its stakeholders.

Recticel said a sale was not in line with its strategy and would leave the residual entity with a “significantly reduced business” focus.

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“The board is of the opinion that this would be an unattractive proposition for its shareholders and employees given the lack of scale, the reduced strategic fit, financial flexibility, equity story and synergy potential between the two remaining divisions,” it said.

It also cited possible regulatory risks with the proposed deal and the likely negative tax consequences for the company and its shareholders.

The firm, which has manufacturing facilities in Belgium, France, Britain and Slovenia, also claimed the offer "significantly underestimates" the stand alone value of the insulation and flexible foams divisions.

In its statement, Recticel noted that it was approached by Kingspan on April 23rd in relation to a possible offer for the group at €10 per share, excluding the 2018 dividend, but that this has also been rejected. It said it remains open to engage with Kingspan.

European expansion

Kingspan said it noted the statement from Recticel. “We note the comments and views expressed and have nothing further to add,” it said.

Davy Stockbrokers later interpreted this to mean Kingspan would not be making any further revised offer for Recticel.

“We liked the concept of the deal but, equally, Kingspan’s discipline is to be admired,” Davy said.

Kingspan’s shares opened 1.2 per cent down at €45.82 in Dublin trade on Friday.

Recticel’s business is organised around four divisions – flexible foams, insulation, bedding and automotive.

The flexible foams and insulation division account for about 60 per cent of business of Recticel's €1.5 billion annual turnover. While Europe accounts for the lion's share of its sales, it also sells into the US and Asia.

Britain accounts for about a fifth of Kingspan’s sales but its reliance on the British market has been falling as it expands further into Europe.