Floor-covering and tile giants agree to $1.7 Billion merger: Mohawk Industries to purchase Dal-Tile, will finalize deal in 1Q 2002 - Brief Article

CALHOUN, GA., AND DALLAS -- In a merger that creates a formidable giant in the floor-covering industry, the country's next to the first largest carpet maker, Mohawk Industries, agreed upon Nov. 19 to purchase the nation's top ceramic-tile supplier, Dal-Tile. The nearly $17 billion deal includes cash, stock and $2617 million in assumed debt

The boards of the one and the other companies approved the merger unanimously, which is wait fored to be final in the first quarter of 2002 Mohawk said that it would add sum of two units people, nominated by Dal-Tile, to its board, and Dal-Tile's management team would remain intact.

"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's president and CEO who will pace up to lead the combined company after Dal-Tile's CEO Jacques Sardas, paces down sometime next year.

"We will be able to take these sum of two units sizable companies, because of better management of the sum of two units companies as one, and give our customers more reasons to purchase from us," Jonathan Swift, Mohawk's CFO said. "You become more important to your customers because you tender more products, a better selection, better delivery and better quality."

The sum of two units companies had been serving similar markets with different fruitss Over the past three years, Dal-Tile shifted its focus to strengthening its position in the residential market, where Mohawk is known to be strong

"Mohawk is of the best in residential distribution, and [with the merger] we will be able to leverage Mohawk's distribution strengths" said Dal-Tile CFO Chris Wellborn. "We were going to have to expand distribution facilities anyway in the residential market."

While Mohawk presents a strong distribution channel, Dal-Tile has a stout presence in Mexico -- a potentially lucrative international market that Mohawk has drawn out wanted to enter.

"We will identify the fruitss we think would be competitive in Mexico, and we will establish a nearness there, either through [Dal-Tile' s] sales force or through adding additional sales staff," Swift said.

With 44 percent of Dal-Tile's production in Mexico alone, the ceramic tile supplier exercises more than 3,000 people there. Although greatest in quantity are production workers, Wellborn pointed without that the company has maintained a "strong management team" in Mexico. "We may be able to build upon that," he added.

Exactly what the sum of two units companies will end up building together has still to be determined, but company executives did say they do not await to realize significant synergies for at least a year.

Based in Dallas, Dal-Tile was seted after World War II by the agency of Robert Brittingham, who sold it in 1990 Brittingham died last month Dal-Tile twitched in nearly $1 billion in receipts in 2000, while Calhoun, Ga.-based Mohawk Industries had sales of $33 billion.

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