The merger agreement calls for Dal-Tile stockholders to receive approximately 50% of the proceeds in cash and 50% in stock. This formula equates to $11 in cash and 0.2414 shares of Mohawk common stock for each outstanding share of Dal-Tile common stock. The merger agreement provides that the exchange ratio increase from 0.2414 up to 0.2716 shares if the Mohawk stock price is between $41 and $36.45, and decrease from 0.2414 to 0.2213 shares if the Mohawk stock price is between $50.12 and $54.67. Based on the closing price of Mohawk stock on Nov. 19, Dal-Tile shareholders would receive equivalent value of $23.10 per share in cash and Mohawk stock.
The merger, which was unanimously approved by the boards of both companies, is subject to stockholder approval at each company, regulatory approvals and other customary closing conditions. The cash portion of the transaction will be financed through a combination of existing Mohawk credit facilities and new debt. The transaction is estimated to be completed in the first quarter of 2002.
"The Dal-Tile merger gives us the opportunity to expand our hard surface business and become a leader in the ceramic tile sector,” said Jeffrey S. Lorberbaum, Mohawk president and CEO. “Their Daltile and American Olean brands are two of the most respected brands in the industry. The strong sales growth and operating margins of Dal-Tile over the last four years reflect the superior performance of the current operating management team. We look forward to bringing Dal-Tile into the Mohawk family and to the strategic growth opportunities this merger offers.”
Lorberbaum also said two persons designated by Dal-Tile would likely be named to the Mohawk board and the Dal-Tile operating management team would be left intact.
"Over the past four years we have achieved constant improvements in sales, earnings and cash flow,” noted Jacques R. Sardas, Dal-Tile chairman and CEO. “The proposed merger represents the ideal culmination of our efforts and the dedication of all our employees, as well as the support we received from our stockholders, customers, lenders and suppliers. The proposed merger will benefit Mohawk's and Dal-Tile's stockholders, customers and employees."