Kingspan is set to purchase ATC for #21m

Kingspan is to pay up to £21 million (€30.8 million) to acquire Advanced Thermal Composites (ATC), a British-based panel manufacturer.

ATC, based in Warrington in England, supplies composite sandwich panels for use in cold storage applications.

Kingspan will pay £20 million up front for the acquisition, with a further £1 million payable over a three-year period.

ATC reported pretax profits of £3.3 million on turnover of £15.3 million in the year ended August and is expected to have net assets, excluding cash, of £3.6 million at completion.

Analysts welcomed the acquisition of ATC, which is being bought for a multiple of six times earnings before interest, tax, depreciation and amortisation, saying it complemented Kingspan's existing business.

Merrion Stockbrokers described the purchase as "a logical strategic and operational fit acquired on attractive multiples".

Davy Stockbrokers said it was "a low-risk transaction" in a sector with which Kingspan was highly familiar and that it should be earnings-enhancing from the outset.

Davy Stockbrokers also believes that it will add 0.6 cent to earnings per share (EPS) this year and 1.2 cent, or 2 per cent, to EPS in 2006.

Shares in the company closed nine cent, or 1 per cent, higher at €9.25 last night.

The ATC deal follows Kingspan's acquisition in March of Century Homes, the manufacturer of timber frame houses, for up to €98 million.

In a conference call yesterday, the company told analysts that, once the two recent acquisitions are taken into account, turnover is expected to rise by more than 25 per cent this year to €1.2 billion.

This should be followed by revenue growth of around 12 to 14 per cent next year to €1.35 billion.

Meanwhile, Kingspan's earnings before interest, tax, depreciation and amortisation are expected to grow by around 28 per cent to €130 million in 2005, followed by growth of 15 per cent to €150 million next year.

Kingspan expects to deliver earnings per share growth of 24 to 25 per cent this year, to be followed by growth of 15 per cent next year.