Insulation materials company Kingspan has agreed a deal with Germany's Schramek to buy about 51% of its Steico business, with an option to acquire a further about 10% of its shares in the future.
Steico is the world leader in natural insulation and wood-based building envelope products. It has four large production sites comprising 27 lines situated in Poland and France.
Steico reported operating revenues of €445m for 2022 and EBITDA of €90m for the year. As at June this year it had guided 2023 revenues of about €378m, while it had gross assets of €509m by December 2022.
Under the terms of the deal, Kingspan said its initial consideration for the shares will be €35 per share, plus potential deferred consideration of up to a further €35 per share depending on achievement of specified thresholds with a material uplift in profitability.
Kingspan said the initial consideration of approximately €251.4m for the deal will be satisfied on completion, with 25% of the consideration potentially being exchanged for new shares in Kingspan - subject to Kingspan's share price.
The Co Cavan-based company said the acquisition is expected to be earnings neutral initially, based on Kingspan consensus EPS for 2023 and Steico guidance for 2023.
But it added that in addition to Steico's existing ambitious growth plans it anticipates significant long term leverage via the Kingspan sales channels.
Gene Murtagh, Kingspan's chief executive, said the acquisition of a majority stake in Steico represents an exciting next step in Kingspan's strategy to provide the full spectrum of insulation products.
"Its suite of wood-based building envelope solutions broadens our ability to enable our customers to meet their sustainability and energy performance needs," he said.
"Kingspan's global routes to market, paired with our drive to innovate and widen the applications of Steico's current technologies, are key to our plans to bring Steico bio-based solutions to the next level," he added.
The existing Steico executive management team will stay and will continue to manage and develop the business.
The acquisition is conditional on regulatory clearance, and is expected to complete in early 2024, Kingspan added.
Kingspan shares were higher in Dublin trade today.
