Kingspan, the Irish insulation maker, said it will make an offer to buy a Swedish maker of waterproofing products hours after confirming it held “informal discussions” with US construction materials manufacturer Carlisle Companies.
The Cavan-based firm will submit an offer for the remaining shares in Nordic Waterproofing after its holding increased above 30 per cent. Kingspan was already the biggest shareholder in the company. It now has to submit an offer within 30 days under Swedish law. Kingspan’s move is in contrast to most acquisitions, which are agreed in private before both companies announce the deal.
Kingspan intends to make an offer at a 13.8 per cent premium to Nordic Waterproofing closing shareprice on Wednesday. That would suggest an overall bid of about €323 million.
The move comes on the same day Kingspan said the North American roofing area, in which Carlisle specialises, “remains a key area of interest” for the business despite it not being actively engaged in a bid for the US firm.
“Kingspan has admired Carlisle for many years and, recognising the clear strategic fit, had recent and informal discussions on a potential transaction,” said Kingspan, which is led by chief executive Gene Murtagh. “At present, there is no active engagement. The North American roofing space remains a key area of interest for Kingspan.”
Shares in Arizona-based Carlisle soared as much as 11 per cent on Wall Street on Monday as investors digested reports over the weekend that it had rebuffed overtures from Kingspan about a potential tie-up. However, the US company’s shares ended that session well off their highs to close 0.8 per cent higher, giving it a market value of $14 billion (€13 billion).
Kingspan’s shares have fallen by 7.2 per cent since the start of trading on Monday to €63.30, reducing the group’s market capitalisation to €12.4 billion, as investors speculated on whether the group would make another attempt at securing a deal – or find another US target.
Bloomberg, which first reported on the talks on Sunday, said that Carlisle had signalled to Kingspan that it would be open to reviewing a more attractive offer.
The Americas accounted for about 22 per cent of Kingspan’s revenue last year, compared with about 72 per cent from Europe.
“These types of talks are always ongoing between companies, particularly those looking to grow through acquisitions. The only difference in this case is that the existence of such discussions was leaked,” said Cantor Fitzgerald analysts in a note to clients on Wednesday. “As such, whether or not there was going to be a deal is immaterial to Kingspan’s underlying business and the value of that business. Indeed, it may demonstrate management’s fiscal prudence that they did not chase a deal if they believed Carlisle were looking for too high a price.”
Kingspan reported last month that its revenue for the first months of the year fell 2 per cent to €4.1 billion on the same period last year, but that results were “relatively pleasing” given the somewhat “challenging environment we were confronted with”.
A deal of the nature Kingspan proposed would have likely led to the group seeking a primary stock listing in the US, which would deal another blow to Euronext Dublin, as the Irish Stock Exchange is now known.
Building materials giant CRH, the largest company on Dublin’s Iseq, is set to quit the Irish market later this month as part of a listings rejig that will see it move its main quotation from London to New York. Smurfit Kappa confirmed on Tuesday it plans to delist in Dublin as part of a $19 billion merger to acquire US paper packaging peer WestRock.
Meanwhile, Flutter Entertainment, the parent of Paddy Power, is widely expected to decide on a similar move soon, after securing shareholder approval earlier this year for a secondary US listing.
