Kingspan Group Plc is in advanced talks to buy a majority stake in German building materials maker Steico SE, people with knowledge of the matter said.
(Bloomberg) — Kingspan Group Plc is in advanced talks to buy a majority stake in German building materials maker Steico SE, people with knowledge of the matter said.
Ireland-based Kingspan is discussing buying all or most of Steico Chief Executive Officer Udo Schramek’s 61% holding, according to the people, who asked not to be identified because discussions are private. Kingspan wouldn’t be required to make an offer to buy out minority investors under the rules of the market where Steico is listed, the people said.
Shares of Steico, which makes wood-based insulation, have fallen roughly 26% in Frankfurt this year, giving the company a market value of €453 million ($509 million). Kingspan is worth €12.7 billion.
Negotiations are in the final stages, though they could still falter, the people said. Representatives for Kingspan and Steico couldn’t be immediately reached for comment
Steico has faced severe headwinds this year as rising interest rates, higher building costs and insufficient subsidies have dented new real estate development in Germany. The company cut 2023 guidance in June, saying sales are expected to be around 15% lower than 2022 and not flat as previously expected.
But Morgan Stanley recently raised a recommendation on Steico to overweight. The bank said the maker of insulation materials is close to the bottom of a downgrade cycle and that growth is expected to pick up, driven by new capacity and wood-fiber share gains. The building materials industry as a whole is being supported by mega trends such as the need for better insulation and sustainable products.
Steico in May confirmed a Bloomberg News report that Schramek, who founded the company’s predecessor in 1986, was exploring strategic options for his controlling stake. The group could attract interest from European building material makers such as Kingspan, closely held German competitor Knauf Group, France’s Cie. de Saint-Gobain and Swiss company Holcim Ltd., people familiar with the matter said at the time.
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