Mohawk Industries Inc. (MHK:US), the maker of Daltile and Columbia flooring, agreed to acquire Italian ceramics manufacturer Marazzi Group SpA for about $1.5 billion in cash and stock to bolster its presence outside the U.S.
The purchase from investors including London-based private- equity firm Permira is expected to be completed in the first quarter of 2013 and boost earnings next year, Calhoun, Georgia- based Mohawk said yesterday in a statement.
Mohawk, which has been expanding through investments in Australia, Brazil, China, Mexico and Russia, is acquiring a manufacturer and marketer of ceramic tile in the U.S. and Europe. Modena-based Marazzi distributes its products in more than 100 countries and will increase Mohawk’s worldwide growth, the U.S. company said.
“Mohawk has a long history of making additive acquisitions,” analysts at Stifel Nicolaus & Co., including John Baugh, wrote in a report yesterday. The Marazzi purchase “strengthens the company’s position in one of the fastest growing flooring segments,” while providing “numerous” opportunities for cost savings.
The purchase is taking place during Italy’s fourth recession since 2001, with the jobless rate at a 13-year high of 11.1 percent. The economy, the third biggest among countries using the euro, is likely to contract 2.1 percent this year and 0.6 percent in 2013, the employer lobby Confindustria forecast on Dec. 11.
The Stifel Nicolaus analysts said they “certainly hope the entry point for Mohawk into Europe is at a low point of the cycle.”
The Italian company, which employs 6,300 people, had revenue of $1.16 billion in 2011, Mohawk said today. Earnings before interest and taxes, depreciation and amortization at Marazzi will total about 145 million euros ($191 million) this year, for a purchase multiple of about eight, it said.
The U.S. manufacturer bought Dallas-based Dal-Tile International Inc., then the country’s biggest maker of ceramic tiles, for $1.66 billion in early 2002. Global demand for ceramic tiles is growing by 5 percent to 6 percent a year, Mohawk said today.
Marazzi was taken private by its namesake founding family and investment firms Permira and Private Equity Partners in mid-2008 in a transaction valued at $1.1 billion at the time.
The Italian company has a “solid management team and leadership positions in the U.S., Russia and Europe,” Mohawk Chief Executive Officer Jeff Lorberbaum said in the statement.
Mohawk fell as much as 1.2 percent to $85.98 in extended trading yesterday after rising 3.3 percent to $87.04 at the close in New York. The shares have gained 45 percent this year.
Barclays Plc (BARC) advised Mohawk on the transaction, the U.S. manufacturer said.
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