DUBLIN (Reuters) – Irish insulation company Kingspan has made a 700 million euro (£605 million) offer for the insulation and flexible foams units of Belgium’s Recticel, it said on Tuesday.
The company has also struck a deal with a third party to sell on the flexible foams businesses if the acquisition goes ahead, it said.
The deal would tighten Kingspan’s grip on the European insulation market, where Recticel’s unit has manufacturing facilities in Belgium, France, Britain and Slovenia.
Recticel’s board will analyse the proposal in line with its fiduciary duty and update the market, the Brussels-based company said in a statement.
It added that Kingspan had not provided it with any details regarding the identity of the third party or what price that company would pay for its flexible foams business.
The flexible foams unit made up 41 percent of Recticel’s 1.5 billion euros of annual sales in 2017, with the insulation unit contributing 18 percent. The remainder was made up from its bedding and automotive units.
The insulation unit was slightly more profitable, however, driving 33 percent of annual profits in 2017 compared to the 31 percent contributed by flexible foams.
Kingspan generates around a fifth of its sales in Britain, although that reliance has been falling as it diversified further into Europe.
Kingspan shares were 2.3 percent higher at 1520 GMT, while Recticel’s were suspended from trading having climbed 20.8 percent shortly after the offer was announced.
Kingspan has spent just over 1 billion euros on a number of acquisitions over the last two years, mainly building up a presence in North, Central and South America.
Acquisitions contributed 17 percent to the Irish company’s sales growth last year, when it recorded record annual revenues of 4.4 billion euros.
Recent purchases including Spain’s Synthesia group and Balex Metal, a Polish based manufacturer of insulated products, helped push the contribution from mainland Europe to almost half of all sales.
(Reporting by Graham Fahy; Additional reporting by Shashwat Awasthi in Bengaluru; Editing by Bernard Orr and Jan Harvey)