Kingspan Group Plc has a agreed to buy a majority stake in German building materials maker Steico SE from founder Udo Schramek.

Ireland-based Kingspan is acquiring a 51% stake in Steico from Schramek GmbH, both companies said on Monday evening, confirming a Bloomberg News report. Schramek will retain 10.1% of Steico’s shares for the time being and remain chief executive officer.

Kingspan is paying initial consideration of €35 a share for the 51% stake in Steico, or about €251 million ($282 million). That amount could double if performance milestones are met later. Kingspan has an option to acquire the rest of Schramek’s stake in the future, it said.

Schramek will resign from his position as chairman of Steico’s administrative board but will remain a member of it, according to its statement. Kingspan will seek representation on the board with the support of Schramek GmbH, Steico said in the statement.

Kingspan won’t be required to make an offer to buy out minority investors under the rules of the market where Steico is listed, according to the statement.

Shares of Steico, which makes wood-based insulation, have fallen more than 25% in Frankfurt this year and closed at €32.15 on Monday, giving the company a market value of €453 million. Kingspan is worth €12.7 billion.

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 have attracted 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.