Kingspan acquires US composite panel firm in $111m deal

BUILDING MATERIALS group Kingspan has bought the US businesses of Metecno, a global manufacturer of composite sandwich panels, in a deal worth $111 million (€75 million).

Metecno is the second largest manufacturer of composite sandwich panels in the US market, operating from three sites located in Florida, Ohio and California.

Kingspan is paying $86 million in cash for the business, plus bank debt acquired of around $25 million. The consideration may vary depending on actual debt acquired, it said. The senior management team of Metecno will be staying in the business.

It is the largest acquisition by the Co Cavan-based company since 2001.

The acquisition, which will be funded in full from existing Kingspan resources, is expected to be mildly earnings enhancing in 2008, the company said.

In the 12 months to June 30th, 2008, Metecno had consolidated revenues of $137 million and earnings before interest, tax, depreciation and amortisation of $15.5 million, excluding management charges.

It is understood that Kingspan has been sizing up the underdeveloped market in the US for insulation panels for some time.

When combined with its business in Canada, Kingspan said the acquisition will give it "unrivalled" geographical market reach in North America at a time when demand for insulation products is expected to increase due to economic and regulatory pressures.

"It looks like a very good deal for Kingspan, especially as it expects it to be mildly earnings enhancing in 08," said one analyst.

Kingspan chief executive Gene Murtagh said the acquisition of Metecno represents an excellent opportunity for Kingspan to assume a market leading position in one of the largest construction markets in the world.

"We believe that the future opportunities should more than offset the current economic conditions in this market," he added.

"Kingspan's North American panel business now has six major facilities capable of serving the entire continent and . . . together with a market leading position, can pave the way for a growing penetration of this product range in the medium term," said Mr Murtagh.

The market reacted favourably to the acquisition. Kingspan's share price, which had been up by around 6 per cent before the announcement, closed the day nearly 10 per cent stronger, as it gained 66 cent to €7.30.