Permira has sold its stake in Italian tile maker Marazzi Group to American trade buyer Mohawk Industries, in a deal valuing the company at €1.2 billion.
The transaction, paid for with a mixture of cash and equity, was initially agreed at the end of December. It means Mohawk, an American flooring group, becomes the world’s largest producer of ceramic tiles.
Founded in 1935, Marazzi makes glazed ceramics, glazed porcelain, technical tile and colour body porcelain. The group posted revenues of €833 million in 2011. Its major markets include Russia, the US, Italy, France and Spain.
Mohawk is buying the business at a purchase multiple of around eight times EBITDA, which in 2012 was estimated at €145 million.
“We found Marrazi attractive because of its solid management team and leadership positions in the US, 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,” said Jeff Lorberbaum, Mohawk’s chairman and CEO, in a statement.
The combination of Mohawk and Marazzi creates opportunities to expand U.S. distribution through service centres and other channels
The American group believes geographical synergies between both businesses are strong, particularly in Europe where Mohawk does not enjoy a very established presence.
“The combination of Mohawk and Marazzi creates opportunities to expand U.S. distribution through service centres and other channels, source ceramic from our worldwide assets, and deploy leading innovation and design trends to all of our ceramic businesses around the globe,” Lorberbaum said.
The relationship between Marazzi and Permira dates back to 2004. The firm first invested in the company alongside Private Equity Partners, exiting part of its stake through an IPO in 2006. It then started a second period of ownership in 2008, when it delisted Marazzi from the Milan stock exchange – alongside the Marazzi family and Private Equity Partners – at about 30 percent below the IPO price.
The group then went through significant turmoil, with its key markets declining by more than 20 percent by volume and currency devaluation in Russia adding to the company’s woes. The company’s 2011 turnover remained lower than the revenues achieved in 2005, 2006, and 2007, which all stood above €900 million.
Its half-year interim results for 2012, at €428 million in revenues and €69 million in EBITDA, showed respective increases by 2.5 percent and 6.2 percent year-on-year.
Marazzi was an investment by Permira’s Fund IV, which closed on €11.1 billion in 2006. The firm, which could not immediately be reached for comment, is currently raising its Fund V. It announced last month that it was scaling back its fundraising target by nearly a quarter, from €6.5 billion to €5 billion.