Mohawk To Acquire Marazzi for $1.5 Billion

Calhoun, GA, Dec. 20, 2012 -- Mohawk Industries said it will acquire Italian tile maker Marazzi Group for $1.5 billion in cash and equity.

Following the acquisition, Mohawk would be the worldwide leading supplier of ceramic tile, according to industry analyst John Baugh of Stifel Nicolaus. Marazzi is already the second largest player in the U.S. behind Mohawk's Dal-Tile.

The Marazzi Group is also a leading manufacturer and marketer of ceramic tile in Russia, Italy, France and Spain.

Marazzi’s 2011 revenues were about $1.16 billion. Marazzi is held by the Marazzi family and two private equity funds—Permira and Private Equity Partners.

Mohawk anticipates that the transaction will close in the first quarter of next year and will be accretive in 2013.

"We believe this strengthens the company’s position around the globe in one of the largest and fastest growing flooring segments," Baugh said.

"We believe the company will find numerous cost savings and certainly hope that the entry point for Mohawk into Europe is at a low point of the cycle."

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 5-6%.

Marazzi distributes ceramic tile in more than 100 countries through a strong international sales force, which will increase Mohawk’s worldwide growth.

“This acquisition represents the next step in the expansion of Mohawk’s global business and will make Mohawk a stronger company," said CEO Jeff Lorberbaum in a press release.

"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 U.S., Mohawk said.

In the U.S., Marazzi’s products are sold through independent distributors, home centers and a few company service centers.
 
“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," Lorberbaum said.