Mohawk goes laminate--Buys Quick-Step parent for $2.6 bil
The addition of Quick Step to Mohawk's product line up similarly gives the Calhoun, Ga.-based rug maker a dominant position in the fast growing laminate category (A recent National Floor Trends survey of retailers found Quick-Step to be the No. 2 brand behind Wilsonart.) At the same time, Mohawk will have immediate access toa greatly expanded European distribution network and a management team that knows the territory.
In announcing the deal, which is expected to be finalized before the end of the year, Mohawk said Quick-Step will continue to be sold through its existing distribution network. It added that "new brands and products will be introduced to meet the needs of the market."
Mohawk's chairman and CEO, Jeffrey S. Lorberbaum, said the deal is in keeping with his company's ambitious plan to branch out from its roots as a carpet maker. "The acquisition of Unilin represents the second major step in diversifying into a total flooring company," said Lorberbaum in a statement. "The acquisition of Dal-Tile in 2002 made Mohawk the largest provider of ceramic in the U.S. Since that combination, we have been able to grow market share, improve costs, and expand Dal-Tile sales."
He added Mohawk decision to target another hard surface segment was swayed by the growth of the laminate category, both in the U.S. and in Europe. According to Lorberbaum, U.S. sales were up by 24 percent last year to $1.2 billion, and are expected to grow by 15 percent in the coming year. He added that sales gains seen in Europe over the last decade have been "exceptional."
"Unilin is a leader in high-end laminate with strong positions in both the U.S. and Europe," said Lorberbaum. He attributed the company's market position and strong profit margins to "the superior performance of the current operating management team who has developed one of the best recognized brands in Quick-Step.
"Mohawk can contribute to Unilin's success by offering an unparalleled U.S. distribution network and the capacity to accelerate market share in the United States. Unilin also brings an insulated roofing and other wood-based panels business with high value applications. Unilin controls and continues to develop significant patents for laminate manufacturing which generate royalty streams.
"The present management will continue to operate Unilin and will make a significant investment in Mohawk. We intend to nominate Frans De Cock, Chairman of Unilin's Management Board, to the Board of Mohawk."
De Cock stated, "We have grown tremendously on the heels of our superior quality, competitive products and innovative technologies. Unilin's legacy of innovation brings to Mohawk many of the key technologies that have driven consumer demand for laminate flooring over the past decade, including the company's technologies for direct pressure laminate, patented Uniclic glueless installation systems, beveled edge, scraped surface look, and many others. We are impressed by Mohawk's operational and financial successes and are excited to be part of the Mohawk family."
The transaction is subject to regulatory approvals and other closing conditions.