Kingspan examined – Davy Stockbrokers

The ISEQ is a lot easier this morning at 4,067, down 30 points as European markets buck world trends in reaction to some poor earnings results.

Davy Stockbrokers looks at the significance for Kingspan of the Rockwool acquisition:

Rockwool acquires BASF Wall Systems; no consideration disclosed but business had revenues in 2012 of E68m

Rockwool announced on July 18th the acquisition of BASF Wall Systems for an undisclosed sum. The business is a manufacturer of external facade insulation and had revenues of E68m in 2012.

The acquisition is consistent with Rockwool’s strategy of developing a presence in the external facade insulation (ETICS – External Thermal Insulation Composite Systems) sector. Rockwool acquired the Polish business FAST in this sector in 2011, and the group believes the BASF acquisition will complement its existing activities.

The acquisition as such is of the bolt-on variety as it will add just circa 3.5pc to group revenues on a full year’s basis and will not require any change to current year guidance.

That said, given Rockwool’s revenue base of circa E300m in Germany, the deal is of much more significance in a national context.

The transaction is interesting in a Kingspan context. Kingspan substantially increased its German presence last year with the acquisition of ThyssenKrupp assets. Kingspan and Rockwool offer the most direct exposure to the medium-term growth that the European insulation market brings. Moreover, it seems to us that by increasing its investment in the ETICS category, Rockwool is becoming ever more a direct competitor of Kingspans according to Davy Stockbrokers. Source: Business World