Kingspan agrees to buy building products division of VicWest

Irish insulation and materials manufacturer Kingspan has agreed to buy the building products division of the Canadian firm VicWest for C$154.5 million (€109.2 million).

The potential acquisition of the business will be funded from Kingspan’s existing credit facilities, Kingspan said.

As part of the arrangement, all of the assets of VicWest's Westeel division is being sold to Ag Growth International with Kingspan retaining the building products division.

The total offer price of $12.70 per share represents a premium of 25.6 per cent to the 20-day volume-weighted average price of the VicWest common shares on the Toronto Stock Exchange as of November 10th.

VicWest’s building products division comprises three insulated panel manufacturing plants in addition to a number of profiling facilities across Canada and the US.

Revenues for the unit for the 12 months to the end of December 2013 were C$253.7million, and pro forma ebitda for the same period was C$13.2 million with forecast pro forma ebitda for 2014 of C$15 million.

The unit had gross assets of C$127.1 million as of the end of June 2014. Post acquisition, Kingspan plans to implement further changes in the business and the impact of these changes is expected to increase the annual pro forma ebitda to circa C$18 million, the group said.

The current management team of the business will be transferring to Kingspan following completion.

"The acquisition of VicWest Building Products boosts Kingspan's ability to drive conversion of the North American construction market to more energy-efficient insulated panels, coming at a time when the energy agenda in North America is becoming increasingly persuasive," said Kingspan chief executive Gene Murtagh.