Third party to Kingspan bid for Belgian rival Recticel revealed

Austrian manufacturer Greiner has emerged as the third party to insulation specialist Kingspan's €700 million bid for parts of Belgian rival Recticel.

Kingspan offered €700 million for Recticel's insulation and flexible foam divisions this week, but said it would immediately sell the foam business to an unnamed third party should its bid succeed.

The news emerged as Recticel confirmed yesterday that its board has sought the identity of the buyer that Kingspan has lined up for the foam division. The Irish group did not comment.

Greiner makes packaging, plastics, medical equipment and foam. It had sales last year of €1.6 billion and generated almost €150 million in cash. It has its headquarters in Kremsmünster, Austria.

Kingspan must name third party in €700m bid, says board of Recticel

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The Austrian manufacturer already has a 50-50 joint venture with Recticel, called Eurofoam, which had sales last year of more than €430 million and employed about 2,500 people.

Recticel said its board has sought some “critical information” from Kingspan needed to make an informed decision on the Irish company’s bid.

The requests include the “identity, rationale, (inter)conditionality, anti-trust risks and consideration in respect of the non-identified third party” to which Kingspan has agreed to sell the foam division.

Tax implications

Recticel’s questions also deal with how Kingspan intends mitigating any competition law risks associated with its offer and the tax implications for the Belgian company’s shareholders.

“Upon receipt of this information from Kingspan, Recticel’s board of directors will further analyse the offer in line with its fiduciary duties and update the market when appropriate,” the company said.

Kingspan’s offer needs the board’s backing and competition regulators’ approval to succeed.

The Cavan-based insulation specialist, led by chief executive Gene Murtagh, did not name the buyer it had lined up for Recticel's foam unit when it announced its bid.

Analysts suggest that Recticel’s insulation business, the more profitable of the two, could cost Kingspan €350 million-€400 million.

They say the acquisition would be positive for the Irish group, consolidating its position in key markets such as the Benelux countries and the UK.

Cash pile

Recticel’s insulation division generated profits of close to €45 million last year on sales of €270 million. The foam business earned a €42 million surplus from a turnover of €621.5 million.

Mr Murtagh recently said Kingspan had about €660 million in cash and available credit.

If its bid for the Recticel unit succeeds and it sells on the foam division as planned, analysts believe it would still have the scope to do further deals.

Recticel’s response failed to deter investors in Kingspan yesterday. The group’s shares closed up 1.85 per cent at €46 after Recticel issued its statement.

Observers said the market saw the Recticel response as positive for the Kingspan bid.