Kingspan seems likely to build on the €251 million it spent buying rivals in 2016 with further purchases this year. The insulation manufacturer has a total of €682 million in cash and undrawn debt available to it, which, factoring in its target debt-earnings ratio of two times, gives it up to €500 million to play with.
Last year, its subsidiary Joris Ide bought Eurobond and Euroclad, two associated businesses, for a total of €94 million. The Kingspan group itself spent €80 million buying Essmann, a German manufacturer that specialises in skylighting, ventilation and related areas. Smaller deals included Bristolite, a US business in a similar area to Essmann, and insulation panel makers in Finland and Belgium.
Chief executive Gene Murtagh said yesterday it had some candidates in mind for its next acquisition (or acquisitions) but added that, as usual, price and value would play key elements in any decision. He indicated that the company might be willing to surpass last year's spend, pointing out that, as it gets bigger, the size of its acquisitions should rise in proportion.
Whether or not it will actually go the full €500 million is another question. Kingspan’s approach to acquisitions has been relatively cautious and it has always been strict about applying its self-imposed target on debt-earnings ratios.
Last year's deals took in Europe, the US and Australia. It does not appear that political developments since then are going to unnecessarily influence Kingspan's choice of location for any likely deals this year.
Murtagh seemed sanguine about the uncertainties that have followed in the wake the UK Brexit vote. He was neutral about US president Donald Trump’s infrastructure building plans, pointing out that roads and walls don’t really need insulation.
Whatever the outcome, it does seem a fair bet that Kingspan will be a bigger company again when it reports results for 2017 in 12 months’ time.
