Kingspan Group

Nothing to be Board about; Recticel deal rationale looks compelling

  • Sectors : Building products
  • Companies : Kingspan Group

Ratings and price correct at time of issue.

  • Kingspan Group

    Closing Price: 4584c

  • RATING 12/05/11

  • PREVIOUS RATING 30/06/09

    NEUTRAL

DAVY VIEW

Kingspan’s proposal to acquire Recticel’s Insulation division looks like another astute move. There clearly is considerable uncertainty given the nature of the offer, but we believe that the fundamental rationale is sound. Recticel’s insulation operations would unquestionably enhance Kingspan’s Insulation Boards division and would likely add at least 4% to the current 2019 forecast earnings base. Not only would it increase the division’s scale, but it would also bring it more directly into France and thus open a new frontier for insulation boards. In addition, the likely proposed net acquisition cost would not place Kingspan’s financial position under any stress as we estimate initial pro-forma net debt/EBITDA would be around 1.6x. Further developments are awaited.

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Apr 17 2019, 09:00 IST/BST

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