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Mohawk Industries becomes worldwide leader in ceramic tile

December 24, 2012

Last week, Mohawk Industries finally announced the acquisition of Marazzi Group, the fifth largest producer, in volume, in the ceramic tile industry. The combination of Mohawk’s existing ceramic tile division, Dal Tile, and Marazzi Group creates the largest ceramic tile company in the world as far as revenues.

Potential synergies

Imported product still represents an important part of Mohawk/Dal Tile presence in the US market. Most of it comes from Italian companies (other than Marazzi), and channel checks indicate that it represents a turnover of several million dollars for the company.

After acquiring Marazzi Group, Mohawk Industries addressed a letter to its partners reminding the important role they play in delivering supply chain services to Mohawk’s customers. While it makes perfect sense, at this stage, to maintain these relationships, we believe that, in the longer term, Mohawk will be able to transfer some of these ranges to Marazzi, which is currently far from full utilization of its existing production plants. While a product by product analysis will be necessary, we do not really see major obstacles to the move.

In relationship to some of the Italian acquired assets, it should also be noted that Marazzi Group submitted a €14.5 million ($18.9 million) insurance claim to Assicurazioni Generali for the damages caused by the May 2012 earthquake in Northern Italy. The production plant located at the epicenter of the quake is running smoothly.

The several synergies possible between the acquired assets and the existing Dal Tile ones, Marazzi’s strong presence in Russia and USA combined with its technical capabilities, and the strategic importance of acquiring a physical presence in the key Italian ceramic tile district, where innovative technologies and design trends are launched, are some of the reasons why we believe that the merger could end up being a positive for the company and accretive to its long term value.

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