Ulster Rugby sponsor Kingspan lining up for major £606m deal with Belgian group
Ulster Rugby sponsor Kingspan yesterday refused to comment on how it will fund a possible €700m (£606m) acquisition of two divisions of Belgian group Recticel.
Kingspan, which employs around 400 people in Portadown, has made an offer for the insulation and flexible foams division of the mattress manufacturing group.
However, analysts estimate that, should the deal go through, it will be funded through a mix of cash and debt equity.
If the deal is approved Kingspan's net debt would be 1.6 times its earnings on a pro forma basis.
The Cavan-headquartered group - which gives its name to Ulster Rugby's Belfast stadium - would prefer its debt does not go beyond a multiple of two times its earnings.
Kingspan said it has already entered into an exclusive back-to-back agreement with a third party for the disposal of all of the flexible foams businesses, should the initial deal go ahead.
It added that there is no certainty its offer will be accepted.
Please log in or register with belfasttelegraph.co.uk for free access to this article.
Shares in the business were trading up almost 4% yesterday, while Recticel's shares were suspended, having jumped over 20% in early trading.
Davy Stockbrokers analyst Flor O'Donoghue said the potential deal looked like a "smart move" for Kingspan.
"This is consistent with Kingspan's strategy, the group likes to consolidate markets," Mr O'Donoghue said.
"This gives the business direct access into France, a region it is not in at the moment."
He added that there is "probably a lot of hurdles to be jumped" before any deal is finalised.
Recticel's flexible foam business had sales of €621.5m (£538m) in 2018, while it reported earnings before interest, taxation, depreciation and amortisation (EBITDA) of €33m (£28.6m).