Mohawk Industries buys laminate maker

Mohawk Industries announced Monday that it would buy its No. 1 competitor in the laminate market for $150 million in cash.

The purchase will combine flooring giant Mohawk, the second-largest producer of laminate wood flooring, with Pergo, its top rival and leader in the billion-dollar laminate flooring market.

Pergo sold about $320 million worth of flooring products in the U.S. and Europe for 2011, according to a news release, compared with about $5.6 billion in worldwide sales for much-larger Mohawk during the year.

"The combination of the entities offers significant opportunities to optimize the assets of both companies while enhancing the design and product performance of both brands," said Jeff Lorberbaum, chairman and CEO of Calhoun, Ga.-based Mohawk Industries, the world's largest flooring manufacturer.

Mohawk expects the transaction to close in the first quarter of 2013, pending approval from regulators. The deal helps Mohawk strengthen its patent portfolio, and gives Mohawk new sales channels through do-it-yourself retailers, Lorberbaum said.

Kemp Harr, publisher of Floor Focus magazine, said the deal makes sense given Mohawk's resources and the shrinking pie for laminate producers.

"By this acquisition, Mohawk has really taken leading market share in the laminate, and they took another big step toward maintaining their edge as largest flooring company in the world," Harr said. "Mohawk already owned the number two company, Unilin, and now they own the number one."

Recently, laminate flooring has fallen in popularity in the face of cheaper and increasingly realistic vinyl flooring alternatives, he said.

But laminate wood flooring, which is sold in Home Depot, Sam's Club and other major retailers, is still doing well with do-it-yourself home improvement customers, even as orders from contractors and independent retailers have decreased.

"The volume is still there is with the home centers and mass merchants," Harr said. "It's still the dream to have the real thing, the hardwood, because it's beautiful and lasts forever."

Mohawk shares closed for the day at $80.27, down 72 cents.

Contact staff writer Ellis Smith at esmith@timesfreepress.com or 423-757-6315.