ICS Magazine

Mohawk Industries completes Dal-Tile acquisition

March 21, 2002
Mohawk Industries, Inc. completed its acquisition of Dal-Tile International Inc.

CALHOUN, Ga.-- Mohawk Industries, Inc. (NYSE:MHK) completed its acquisition of Dal-Tile International Inc. Mohawk paid Dal-Tile $11 in cash and .2213 of a share of Mohawk common stock for each outstanding share of Dal-Tile common stock (NYSE;DTL), under the terms of the acquisition agreement.

The total value of the acquisition is approximately $1.663 billion, which includes approximately $710 million of cash, approximately 15 million shares of Mohawk common stock and stock options together valued at approximately $920 million as of closing and the repayment or assumption of approximately $261.7 million of Dal-Tile's debt.

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, 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 merger was initially financed with a combination of a $600 million 364-day bridge credit facility, Mohawk's existing revolving credit facility and the Company's existing on-balance sheet asset financing securitization. It plans to repay the bridge credit facility after completion of the merger through a private placement of senior notes or other available means. After the completion of the acquisition, the Company estimates its debt-to-total capitalization ratio to be approximately 41 percent.

Established in 1947, Dal-Tile (www.daltile.com) is a Dallas-based manufacturer and distributor of ceramic tile. Operating nine manufacturing facilities in the U.S. and Mexico, the company employs approximately 7,900 persons. Its products go to market through three distinct channels: Company-operated sales service centers, independent distributors and home center retailers.

"The Dal-Tile merger creates the largest floorcovering manufacturer and distributor in the world with the largest ceramic tile operation in the U.S. and the second largest carpet and rug operation," said Jeffrey S. Lorberbaum, Mohawk president and CEO. "Dal-Tile adds approximately $1 billion in annual sales of ceramic tile and stone products offering the broadest selection of products and the most recognized brands in the industry."

He said that Dal-Tile's distribution channels, which include more than 200 sales service centers, independent distributors and home center retailers, offer "synergistic opportunities to increase sales, leveraging Mohawk's existing distribution channels with Dal-Tile's."

"The exceptional financial performance of Dal-Tile over the last four years reflects the superior business and growth strategy of the high quality management team," said Lorberbaum. "We plan to keep the operating management team intact going forward. The strengths of both companies are complementary with consistent strategies that include the most recognized brands, low cost operations, strong marketing programs, broad product lines and exceptional customer service."

Mohawk Industries (www.mohawkind.com) is a leading producer of woven and tufted broadloom carpet and rugs for residential and commercial applications. It designs, manufactures and markets carpet in a broad range of colors, textures and patterns. Mohawk also offers a broad line of washable accent and bath rugs through Aladdin and area rugs through Karastan, American Rug Craftsmen and Helios.