KINGSPAN has made its second acquisition in two weeks, paying £8.6 million sterling (£8.3 million) for S&D, a Northern Ireland manufacturer of polyethylene bulk containers. The acquisition is being part-funded through a placing of 1.32 million shares at 225p, raising just under £3 million.
Intermediate bulk containers (IBCs) are used to transport various liquids and solids in the chemicals, brewing, fuel and other industries. S&D - which has operations in Portadown, Co Armagh, Banbridge and Newry in Co Down and one operation in Britain - has sales of around £16 million sterling - £4 million in Ireland and £12 million in Britain.
In the year to July 1995, S&D returned pre-tax profits of £1.75 million with net assets of £1.91 million. As part of the acquisition, Kingspan is also buying Ar-met Plastics which operates in the areas of the business that Kingspan is acquiring. The company had pre-tax profits of £163,000 sterling.
Of the total consideration of £8.6 million, £7.5 million is being paid for S&D - split in two equal tranches of loan notes which mature next September and February
S&D is expected to have pre-tax profits of £2.5 million in the current year and the consideration will be increased or decreased on a pound-for-pound basis for any variation on this profit level, subject to a minimum of £7.4 million. Kingspan is paying £500,000 sterling in cash for the Ar-met Plastics business and a further £350,000 in cash for two Portadown properties used by Ar-met.
Kingspan placed 1.32 million shares at 225p through Riada to raise £2.97 million towards the cost of the acquisition. Given that Kingspan previously dealt at 230p, this an exceptionally good placing price for a tranche of stock which is just under 5 per cent of the existing share capital. Kingspan shares dealt at 230p yesterday and were being bid at 235p, indicating the market's satisfaction with the acquisition.
Earlier this month, Kingspan acquired the outstanding 50 per cent of its Dutch subsidiary for £2.6 million.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)