Mohawk Ind. acquires ceramic tile company Marazzi
Home & Textiles Today Staff -- Home Textiles Today, December 27, 2012
Calhoun, Ga. - Further cementing its foothold on a total flooring business, especially on hard surface products, Mohawk Industries has entered into a definitive agreement to acquire ceramic tile company Marazzi Group.
This move will make Mohawk Ind. "the worldwide leader in ceramic tile," the company said.
The Marazzi Group is a leading manufacturer and marketer of ceramic tile in several countries, including Russia, the United States, Italy, France and Spain. Its 2011 revenues were about $1.16 billion (€833 million), 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 about $1.5 billion (specifically €1.17 billion), with a combination of cash and equity. The transaction is expected to be completed during the first quarter of 2013, pending customary closing conditions and regulatory approvals. Mohawk anticipates that the transaction will be accretive in 2013.
"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," Jeff Lorberbaum, Mohawk's chairman and ceo. "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."
Mohawk Ind. noted that 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.
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.
Mohawk Ind. 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 company said. "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."
Summed Lorberbaum: "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."
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