April 26, 2019 / 11:07 AM / 3 months ago

Kingspan walks away after Recticel rejects bid for units: source

DUBLIN (Reuters) - Irish insulation firm Kingspan has ended discussions with Recticel over a bid for its Belgian rival’s foam and insulation units and has no plans to reengage, a source close to the process said on Friday.

Recticel rejected the 700 million euro ($779 million) bid for its two main businesses on Friday but said it was open to a takeover at the right price, after it disclosed that Kingspan had approached it in relation to a possible offer for the entire group.

Kingspan responded earlier on Friday by saying it noted the views expressed in Recticel’s statement and that it had nothing further to add.

The source told Reuters that the process was “done and dusted.”

Kingspan made the unsolicited approach earlier this month when it said it had also struck a deal with Austrian manufacturer Greiner to sell on the flexible foams businesses if the acquisition went ahead.

Recticel rejected the offer citing negative tax consequences for it and its shareholders. It said it significantly underestimated the standalone value of the two units and would leave it with a residual bedding and automotive business that it considered an “unattractive proposition”.

The Brussels-based firm also raised concerns that the offer would trigger regulatory risks and that it still did not have sufficient clarity regarding the carve-out with Greiner.

However Recticel said it received an approach by Kingspan on April 23 in relation to a possible offer for the entire group at 10 euros per share - excluding the 2018 dividend - and while this had been rejected it was open to a better offer.

Analysts at Davy Stockbrokers, who wrote in a note that they understood Kingspan will not make a revised offer, said that while they liked the concept of the initial deal, a takeover would bring added risks including follow-on non-core disposals and that Kingspan’s discipline was to be admired.

Editing by Jason Neely

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