IVC Deal a Good Sales Opportunity for Mohawk

New York, NY, Jan. 15, 2015 -- Stifel Nicolaus still has a "buy" rating on shares of Mohawk Industries following Mohawk's announced acquisition of vinyl firm IVC for $1.2 billion.

IVC had sales of $700 million globally in 2014.

In a note to investors, analyst John Baugh noted that unlike some other transactions, there likely won't be significant cost savings for Mohawk and that the value of the deal lies in increased sales.

"IVC is investing in assets that should increase its sales run rate by at least $250 million or 35% from the current run-rate within 12-18 months," Baugh wrote.

"We do think IVC will be able to assist Unilin with its brand new LVT line in Belgium and will greatly accelerate the timing of Unilin’s production capabilities in the U.S., which were not imminent."

Within the next 18 months, as much as 750 million square feet of LVT capacity is expected to be added to the U.S. marketplace, with IVC representing about 25% of that figure, Baugh said.

Mohawk should also be able to drive IVC sales overseas.

"Mohawk/Unilin’s large presence in Europe and Russia in ceramic and laminate floors will no doubt play a critical role in opening up distribution for IVC in these markets," Baugh said.