Kingspan to spend €96m on acquisitions
KINGSPAN HAS significantly increased its presence in Europe and entered the Middle East with the announcement of two acquisitions totalling more than €96 million.
The Irish company is buying ThyssenKrupp Construction Group, the insulation business of German steel giant ThyssenKrupp, for a total consideration of €65 million.
Analysts welcomed the announcement, noting that the price tag of €65 million was lower than expected.
The acquired business, which had sales of €315 million for the year to March but recorded an operating loss of €5.7 million, had become increasingly peripheral to ThyssenKrupp in recent years.
Kingspan had been eyeing up the business for a number of years and was considered the most likely suitor when it came on the market.
The acquisition, which follows Kingspan’s purchase of CRH’s European insulation business in late 2010, will double the Irish company’s insulation panels business, a major growth area for the company.
Excluding the ThyssenKrupp acquisition, insulation panels represent around half of Kingspan’s overall revenue and last year delivered trading profit growth of 41 per cent.
German-based ThyssenKrupp’s steel business operates seven separate sites across mainland Europe.
Separately Kingspan is to acquire its first manufacturing site in the Middle East with the purchase of Dubai-based insulation company Rigidal Industries for $38.6 million (€31 million).
The aluminium and steel cladding business had sales of $39 million in the year to the end of June.
Kingspan products have already been used in the construction of major projects in the Gulf States such as Dubai airport and Dubai metro.
Nonetheless, the Middle East still represents on a fraction of the company’s revenue.
The group has increased its focus outside the Republic since the recession bit in 2007. Last year Britain and Northern Ireland accounted for 39 per cent of its €1.55 billion sales. Europe amounted to 38 per cent, North America 14 per cent and Australasia 4 per cent.
Kingspan, which has a strong balance sheet, has long indicated its interest in acquiring businesses particularly in Europe and the US.
Earlier this year, the business walked away from the race to buy Metlspan, a North American subsidiary of Australian-listed Bluescope, as it believed the price was too high.
Kingspan yesterday said the acquisitions would be “modestly earnings accretive in 2013”, due primarily to the integration and restructuring initiatives involved in the acquisition of the ThyssenKrupp business.
Kingspan closed up 5 per cent at €7.084 in Dublin yesterday evening.