Investors Wednesday welcomed the latest acquisition announced by Mohawk Industries, bidding up shares in the Caloun, Ga.-based floorcovering company to a record high.
The $1.2 billion purchase of the IVC Group is part of nearly $5 billion of acquisitions by Mohawk of other flooring companies since 2002.
Shares in the Calhoun, Ga.-based carpet maker have jumped more than seven-fold in the past six years, rising by another $6.94 per share, or 4.3 percent Wednesday, to close at an all-time high of $167.05
Mohawk CEO Jeff Lorberbaum, who owns nearly 9.6 million shares of Mohawk stock, boosted his company holdings by more than $66 million Wednesday to nearly $1.6 billion.
Merging with Mohawk
Dale -Tile for $1.8 billion in 2002
Marazzi Group bought for $1.5 billion in 2013
Unilin Holdings NV for $988 million in 2005
Spano Group for $125 million in 2013
Pergo or $150 million in 2012
Mohawk stock jumped by 4.3 percent after the company announced its $1.2 billion purchase of the Belgium-based IVC Group, the fastest growing maker of luxury vinyl tile in the world. The purchase -- the latest among a half dozen major acquisitions that have helped swell Mohawk revenues and profits over the past decade -- will make Mohawk the undisputed leader in floorcovering with No. 1 market positions in carpet, laminate, vinyl and wood flooring.
"After successfully managing through the recession, in 2012 Mohawk transitioned from a conservative approach to an aggressive growth strategy," Mohawk CEO Jeff Lorberbaum said Wednesday, citing three acquisitions in 2013 prior to this week's purchase agreement for IVC. "The acquisition of IVC positions Mohawk as a major player in both the rapidly growing LVT (luxury vinyl tile) category and the expanding fiberglass sheet business."
Mohawk, which began as a textile company in 1875 and evolved into one of the early carpet companies in the Dalton area, has grown to employ more than 33,000 workers at plants around the world and is a global leader in both soft and hard floor surfaces. Mohawk is expected to generate nearly $8 billion in sales this year, 70 percent of which will come from the United States.
Lorberbaum told analysts Wednesday he expects the acquisition of IVC will add 30 cents to 50 cents per share to company earnings in 2015 even as IVC continues to construct $115 million of facilities in Dalton to help boost its U.S. production. As the 1,300-employee IVC is integrated into the Mohawk suite of businesses -- and new luxury vinyl tile plants are completed -- IVC should help boost sales and profits even more in future years.
"IVC's sheet vinyl is constructed with a fiberglass core that provides a cushioned product that does not crack, curl or expand, making it durable and easy to install," Lorberbaum said.
Among 18 industry analysts that follow Mohawk Industries, the consensus forecast for earnings in 2015 ranges from $8.75 to $9.85 per share, up from the $6.55 per share earned in 2013 and the projected $8.10 per share for 2014.
IVC was founded in Belgium in 1997 by Phillip Balcaen, the majority owner who has agreed to stay with the company and help manage its growth under Mohawk's ownership. Mohawk will pay Balcaen and other IVC shareholders about $130 million in stock and more than $1 billion in cash raised from new debt.
Mohawk's debt will rise to 2.6 times the company's cash flow, or earnings before interest, depreciation and taxes. But Mohawk's chief financial officer, Frank Boykin, said the extra debt should not hurt the company's bond rating.
The $1.2 billion purchase in includes $115 million for a new LVT and a new digitally printed laminated line that is still being built in Dalton. IVC two European plants and a new plant being built in Dalton.
Contact Dave Flessner at email@example.com or at 757-6340.