Mohawk buys Italian tile giant for Christmas

Mohawk buys Italian tile giant for Christmas

December 21st, 2012 by Ellis Smith in Business Around the Region

Hard surface additions by Mohawk:

* Dal-Tile -- 2002

* Unilin -- 2005

* Columbia -- 2007

* Sanfi -- 2010

* ARAUCO -- 2012

* Pergo -- 2012

* Marazzi -- 2012

Source: Mohawk, news reports

In one of the biggest deals of 2012, Calhoun, Ga.-based Mohawk Industries will purchase Italian tile giant The Marazzi Group for $1.5 billion.

With the purchase of Italy's largest tile producer by sales, Mohawk will renew its dominance in the worldwide market for tile, which is the No. 1 flooring product outside the U.S., industry analysts say.

Mohawk also further establishes itself as the world's largest flooring company, with a commanding share of both the carpet and hard surface markets.

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

Lorberbaum said Marazzi, which flooring insiders consider the design leader in tile, was attractive because of its leading market position Internationally as well as in the U.S., where it controls about 14 percent of the market.

Marazzi is also the number one tile supplier in Russia, which is a similar size market to the U.S., as well as France, Italy and Spain.

"Marazzi's differentiated products, leading-edge design, efficient manufacturing and exemplary service have created one of the most valued brands in the industry," Lorberbaum said.

Along with Mohawk's Dal-Tile segment, which controls about 34 percent of the U.S. market, Mohawk will sell more than half of all tile purchased in the U.S., said Kemp Harr, publisher of Floor Focus Magazine.

The Marazzi purchase is the latest deal in a string of a half-dozen large noncarpet acquisitions that Mohawk has completed through the 2000s, Harr said. Prior to Mohawk's shopping spree, Dalton, Ga.-based Shaw Industries ranked the world's largest flooring company.

"In 1999, Mohawk was just a carpet company," Harr said. "Now, they are by far the world's largest flooring company."

Beginning with its agreement in 2000 to distribute flooring products for other manufacturers, the company has added up a steady stream of acquisitions to its bulging portfolio. The company's growth spurt under Lorberbaum into an international manufacturing giant could see Mohawk expand into a $10 billion company when the housing market recovers, Harr said.

"That is an unbelievable pace," he said. "Mohawk has been the leader in flooring manufacturing, and now they're much, much larger than anybody else."

The Marazzi Group was founded and managed by Filippo Marazzi until his death on Nov. 27, just days after a handful of financial publishers printed rumors that the company was to be sold. The company was briefly traded on the Italian stock exchange, but economic troubles in Europe led officials to delist it after less than three years.

Marazzi produces more than 1 billion square feet of glazed ceramic and porcelain tile, technical tile and color body porcelain, out of worldwide consumption of about 110 billion square feet. It produces about a quarter of all tile made in Italy, according to investing publication Seeking Alpha.

Currently, Marazzi employs about 6,300 people worldwide, with plants in Italy and other manufacturing facilities in Russia, the U.S. and western Europe. Its products can be found in more than 130 countries at more than 14,500 retailers, according to TileLetter, a trade publication for the tile industry.