BDC

Kingspan Group plc announces the acquisition of a majority stake in natural insulation and wood-based building envelope products Steico SE

Kingspan Group plc, the global leader in high performance insulation and building envelope solutions, is pleased to announce that it has entered into an agreement with Schramek GmbH (“Schramek”) to acquire c.51% of the shares of Steico SE (“Steico”), with an option to acquire a further c.10% of shares in Steico in the future.

Steico is the world leader in natural insulation and wood-based building envelope products, based in Germany and listed on the unofficial markets of several German Stock Exchanges. It has a very well invested asset base, with four large production sites comprising 27 lines situated in Poland and France, including additional capacity nearing completion with up to EUR200m revenue headroom.

Steico had audited operating revenues of EUR445m in the 12 months to 31 December 2022 and EBITDA of EUR90m in the same period.  As at June 2023, Steico guided 2023 revenues of c.EUR378m at an EBIT margin of 8% – 10% (FY22 14.6%).  As at 31 December 2022, Steico had gross assets of EUR509m. 

The initial consideration for the shares will be EUR35 per share, plus potential deferred consideration of up to a further EUR35 per share contingent on achievement of specified thresholds with a material uplift in profitability.  The initial consideration of approximately EUR251.4m will be satisfied on completion, with 25% of the consideration potentially being exchanged for new shares in Kingspan (subject to Kingspan share price at completion).  The consideration payable under the put and call option to acquire Schramek’s remaining c. 10% in Steico is for a capped amount based on a multiple of future earnings.

The acquisition is expected to be earnings neutral initially, based on Kingspan consensus EPS for 2023 and Steico guidance for 2023. 

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.

The acquisition is conditional on regulatory clearance, and is expected to complete in early 2024. Following completion, Steico will continue to maintain its listings on the German Stock Exchanges.

Gene Murtagh, Kingspan Chief Executive Officer, commented:

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:

“It has been a great honour to lead the team at Steico to become the pre-eminent global supplier of wood-based insulation. 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.

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BDC 309 : Oct 2023