Kingspan Group PLC (LSE:KGP), the building materials company, is set to acquire a majority stake in German insulation firm Steico for around €250mln.
Expected to be completed in early 2024, the deal will see Kingspan acquire 51% of the natural insulation provider’s shares, with an option to up its stake by 10% in the future.
Kingspan currently operates six separate divisions with multiple arms feeding into the insulation industry.
Initially, Steico will receive €35 per share, but dependent on reaching specific thresholds in terms of profitability, this deal could increase by a further €35 per share.
In a company statement, Gene Murtagh, Kingspan's chief executive officer, said: "Steico represents an exciting next step in our strategy to provide the full spectrum of insulation products.
“Its suite of wood-based building envelope solutions broadens our ability to enable our customers to meet their sustainability and energy performance needs.”
Murtagh believes combining Steico’s current technologies with Kingspan’s routes to market will help drive long-term value to investors.
The deal isn’t expected to affect 2023 earnings for either Kingspan or Steico.
Shares in Kingspan rose over 3% in early Tuesday morning trading, having opened at just under 70p.