Kingspan Acquisition of European Insulation Manufacturer

KINGSPAN GROUP plc, has acquired a majority stake in insulation manufacturer Steico SE from Schramek GmbH, with an option to acquire a further 10% of shares in the future.

Steico manufactures natural insulation and wood-based building envelope products based in Germany. It has four large production sites comprising 27 lines situated in Poland and France, with additional capacity nearing completion with the potential of generating up to €200m of further revenue.

Kingspan states, “In addition to Steico’s existing ambitious growth plans we anticipate significant long term leverage via the Kingspan sales channels. The existing Steico executive management team will be retained in the business, and will continue to manage and develop the business. Upon closing, Kingspan will seek fair representation on Steico’s administrative board.”

Gene Murtagh, Kingspan Chief Executive Officer, said: “The acquisition of a majority stake in Steico represents an exciting next step in our 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. 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.”

Udo Schramek, Steico Chief Executive Officer, stated: “We are now entering the next phase of growth and are very enthusiastic about the collaboration opportunities Kingspan brings, in both the existing Steico range and across the Kingspan portfolio and geographies. I am excited about the future for Steico and about being invested in the future growth of both companies.”

Acquisition of European Insulation Manufacturer

Steico had audited operating revenues of €445m in the 12 months to 31 December 2022 and EBITDA of €90m in the same period. It reported gross assets of €509m at the end of 2022.

Steico shares were valued at €35 each, with a deferred extra payment agreed of up to a further €35 per share if specified thresholds are achieved with a “material uplift” in profitability.

The initial payment of approximately €251.4m will be paid on completion of the acquisition, with 25% potentially being exchanged for new shares in Kingspan, depending on the price of Kingspan’s shares at the time.

The payment under the put and call option to acquire Schramek’s remaining circa 10% in Steico is for a capped amount based on a multiple of future earnings.

The acquisition is not expected to initially add to earnings per share, and is expected to complete in early 2024.

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