Mohawk Industries Inc. (MHK) recently entered into a definitive agreement to acquire the IVC Group – a leading manufacturer of sheet vinyl, luxury vinyl tile (LVT) and laminate – with operations in Europe and the United States. The deal will help Mohawk expand its range of flooring products, which will further strengthen its market share in the flooring industry.
The cash and stock deal is worth $1.2 billion and is expected to be completed by the end of March, this year, subject to certain regulatory terms and conditions. Mohawk anticipates that the deal will be accretive to earnings per share in the first 12 months of this year.
Founded in Belgium, the IVC Group ranks among one of the major sheet vinyl providers in Europe and the U.S. and also a leading company in the fast growing LVT sector which has witnessed nearly 18% increase in demand in the past year. IVC's sheet vinyl is made with a fiberglass core that results in a cushioned product making it durable and easy to install.
For Mohawk, the deal will be a strategic fit and boost its existing products of sheet vinyl and LVT products, which boast years of expertise. Further, the company will collaborate with IVC to begin operations at its new Belgian LVT factory faster. On the other hand, IVC Group will be able to increase its European revenues.
In the U.S., LVT currently represents around 5% of the total flooring market, and sales are estimated to rise more than 15% annually by the end of this decade. Post the deal closure, IVC Group’s LVT plant in Dalton, GA will position Mohawk to meet the accelerating demand for LVT in the U.S. market.
The IVC buyout follows several acquisitions by Mohawk over the past three years, including The Marazzi Group in Italy, Pergo in Germany, the Spano Group and Unilin Holding NV in Belgium, and Dal-Tile International Inc in U.S.
Stocks to Consider
Mohawk Industries carries a Zacks Rank #3 (Hold). Better-ranked stocks in the home furnishing/textile industry include Restoration Hardware Holdings, Inc. (RH), Pier 1 Imports, Inc. (PIR) and Williams-Sonoma Inc. (WSM). All these stocks have a Zacks Rank #2 (Buy).
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