Mohawk Industries, Inc. Announces Purchase Of Marazzi Group
CALHOUN, Georgia, Dec. 20, 2012 /PRNewswire/ -- Mohawk
Industries, Inc. (NYSE: MHK) today announced that the Company has
entered into a definitive agreement to acquire the Marazzi Group,
which will make Mohawk the worldwide leader in ceramic tile.
The Marazzi Group is a leading manufacturer and marketer of
ceramic tile in all its major geographies, including Russia, the United
States, Italy, France and Spain. Marazzi's 2011 revenues were about €833
million, or $1.16 billion, with
EBITDA of approximately 15.5% under historical IFRS accounting.
Marazzi is held by the Marazzi family and two private equity
funds—Permira and Private Equity Partners.
Mohawk is acquiring Marazzi for €1.17 billion, or approximately
$1.5 billion, with a combination of
cash and equity. Marazzi's estimated 2012 EBITDA of €145 million
represents a purchase multiple of about eight times. We expect to
complete the transaction during the first quarter of 2013 pending
customary closing conditions and regulatory approvals. Mohawk
anticipates that the transaction will be accretive in 2013.
Ceramic tile remains the world's most widely utilized flooring
product with an estimated worldwide consumption of more than 110
billion square feet and annual growth of 5 to 6%. Marazzi
distributes ceramic tile in more than 100 countries through a
strong international sales force, which will increase Mohawk's
worldwide growth.
Founded and managed by Filippo Marazzi,
Sr. and his family, the Marazzi Group has become a global
leader in ceramic tile with worldwide brand recognition. Marazzi's
product line features glazed ceramic, glazed porcelain, technical
tile and color body porcelain. Marazzi introduced the single fire
process that revolutionized the industry, making ceramic more
accessible to a wider market. Technological innovations
continue today with new introductions such as crystalized porcelain
and single-fired thin tiles. Marazzi operates manufacturing
facilities in Russia, the United States and Western Europe and employs around 6,300
people
Jeff Lorberbaum, Mohawk's
chairman and chief executive officer, stated, "This acquisition
represents the next step in the expansion of Mohawk's global
business and will make Mohawk a stronger company. We found
Marrazi attractive because of its solid management team and
leadership positions in the U.S., Russia and Europe. Marazzi's differentiated products,
leading-edge design, efficient manufacturing and exemplary service
have created one of the most valued brands in the industry. We have
many opportunities to improve results by leveraging best practices,
operational expertise, product innovation and manufacturing
assets."
Marazzi has the number one position in the Russian ceramic
market, which is similar in size to the
United States. Marazzi operates a unique model that
optimizes its total supply chain from manufacturing to distribution
to retail. Marazzi operates two manufacturing sites and 21 regional
distribution centers. Marazzi owns and franchises more than 300
retail stores that carry only Marazzi products. About 50% of the
Marazzi Russian business is sold directly to end users, and the
retail advertising done by the stores has created a strong consumer
brand. We expect to continue the growth in Russia by expanding company owned and
franchised stores, other distribution channels and increasing our
geographic reach.
In the U.S., Marazzi's products are sold through independent
distributors, home centers and a few company service centers.
Leveraging the combined manufacturing expertise, design
capabilities and distribution systems, we will enhance our ceramic
business. The total residential and commercial offerings
complement each other and can satisfy every requirement in the
market. We will also be able to provide additional products from
our facilities in Mexico,
China and Europe to compete directly with the large
quantity of imported ceramic tile.
Presently European flooring is at a low point where Marazzi has
leading positions in Italy,
France and Spain. Marazzi
has rationalized its capacity to align with the market and is
implementing new strategies to enhance its sales in the region and
adjacent countries. Improvements have been made that enhanced
the manufacturing efficiency, quality and sales
effectiveness. Additional investments are planned to further
reduce manufacturing cost, increase sales and expand our design
capabilities.
Lorberbaum said, "The combination of Mohawk and Marazzi creates
opportunities to expand U.S. distribution through service centers
and other channels, source ceramic from our worldwide assets,
utilize our relationships to expand all product categories and
deploy leading innovation and design trends to all of our ceramic
businesses around the globe. Mohawk & Marazzi's strong
management and solid financial position combined with process and
material knowledge, distribution expertise, and synergies with
other products will deliver additional value to our
shareholders."
Barclays acted as the exclusive advisory to Mohawk on this
transaction. Mohawk has scheduled a conference call at
10:00 a.m. Eastern Time on
Friday, December 21, 2012, to discuss
the Marazzi acquisition. The telephone number is 1-800-603-9255
toll free for US/Canada and
+1-706-634-2294 for International/Local. Conference ID #83790978. A
replay will also be available until January
4, 2013 by dialing +1-855-859-2056 toll free for US/local
calls and +1-404-537-3406 for International/Local calls and
entering Conference ID # 83790978.
Certain of the statements in the immediately preceding
paragraphs, particularly anticipating future performance, business
prospects, growth and operating strategies and similar matters and
those that include the words "could," "should," "believes,"
"anticipates," "expects," and "estimates," or similar expressions
constitute "forward-looking statements." For those statements,
Mohawk claims the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995. There can be no assurance that the
forward-looking statements will be accurate because they are based
on many assumptions, which involve risks and uncertainties. The
following important factors could cause future results to differ:
changes in economic or industry conditions; competition; inflation
in raw material prices and other input costs; energy costs and
supply; timing and level of capital expenditures; timing and
implementation of price increases for the Company's products;
impairment charges; integration of acquisitions; international
operations; introduction of new products; rationalization of
operations; tax, product and other claims; litigation; and other
risks identified in Mohawk's SEC reports and public
announcements.
ABOUT MOHAWK
Mohawk is a leading supplier of flooring for both residential
and commercial applications. Mohawk provides a complete
selection for all markets of carpet, ceramic tile, laminate, wood,
stone, vinyl and rugs. These products are marketed under the
premier brands in the industry including Mohawk, Karastan, Lees,
Bigelow, Durkan, Mohawk Home, Daltile, American Olean, Unilin and
Quick-Step. Mohawk's international presence includes
operations in Australia,
Brazil, China, Europe, Malaysia, Mexico and Russia.