Local News

December 21, 2012

Mohawk buying tile maker for $1.5 billion

Mohawk Industries, already the world’s largest floorcovering company, is getting bigger.

On Thursday, the Calhoun-based company announced it is buying the Marazzi Group, an Italian ceramic manufacturer, for $1.5 billion in a combination of cash and equity.

Marazzi is held by the Marazzi family and two private equity funds — Permira and Private Equity Partners. Marazzi’s 2011 revenues were about $1.16 billion. Marazzi operates manufacturing facilities in Russia, the United States and Western Europe and employs about 6,300.

“This acquisition represents the next step in the expansion of Mohawk’s global business and will make Mohawk a stronger company,” said Jeff Lorberbaum, Mohawk’s chairman and chief executive officer. “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.”

Mohawk officials expect the transaction to be completed in the first quarter of 2013 “pending customary closing conditions and regulatory approvals.”

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 percent to 6 percent. Marazzi distributes ceramic tile in more than 100 countries “through a strong international sales force, which will increase Mohawk’s worldwide growth,” according to Mohawk.

“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. “Mohawk and 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.”

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.

Marazzi has the No. 1 position in the Russian ceramic market, which is similar in size to the United States, according to Mohawk. Marazzi operates two manufacturing sites and 21 regional distribution centers. Marazzi owns and franchises more than 300 retail stores that carry only Marazzi products.

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,” according to a Mohawk press release. “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.”

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