Thursday, September 26, 2013
DJ: Lixil Reaches Agreement To Buy Grohe For $4.13bn
TOKYO--In one of the biggest acquisitions by a Japanese firm in Europe, housing-equipment maker Lixil Group Corp. (5938) has agreed to buy German bathroom-fittings maker Grohe Group for about 3.06 billion euros ($4.13 billion).
The deal is also the second-biggest outbound acquisition by a Japanese firm so far this year after Mitsubishi UFJ Financial Group's $5.6 billion purchase of Thailand's Bank of Ayudhya.
Partnering with the Development Bank of Japan, Lixil, Japan's largest housing material maker by revenue, said it will take a 87.5% stake from Grohe's current owners, financial investors TPG and Credit Suisse's private-equity arm. The deal is likely to close in the first quarter of 2014.
Grohe said in a statement that it and its subsidiary Joyou will retain independence within the Lixil group, and Grohe Chief Executive David Haines has signed a new contract with a term of five years.
"Lixil is the perfect partner for Grohe and Joyou," strengthening market access to the Asia Pacific as well as emerging markets, Mr. Haines said in a release.
By acquiring the German sanitary fittings maker, Lixil will be able to ramp up its business in Europe. In 2011, the Tokyo-based company bought Italian construction engineering group Permasteelisa SpA for about EUR575 million. Lixil's sales in Europe currently account for about 18% of the total.
Lixil is best known domestically as a maker of aluminum-sash windows as well as toilets and plumbing fixtures. The firm has grown domestically and globally through a round of mergers and acquisitions.
Formerly known as JS Group, Lixil Group was founded through the merger of two long-running firms, Tostem Corp. and Inax Corp. When they merged in 2001, the new entity was first called Tostem Inax Holdings Corp., one of several names it has been known by. Tostem was founded in 1923 as a supplier of building materials and services, while Inax was established in 1924 as a manufacturer of tiles, building materials and sanitary fixtures.
Operating in over 30 countries, Lixil aims to eventually boost its net sales to Y1 trillion. Currently, overseas net revenue is around Y200 billion, accounting for about 14% of the total.
In 2009, it bought American Standard brand's Asia-Pacific operations, and earlier this year, it acquired the parent of the U.S. toilet and plumbing facilities from a private-equity firm for about $342 million.
"We're considering a few more acquisitions abroad," Lixil's president, Yoshiaki Fujimori, said at a news conference when Lixil bought ASD Americas Holding Corp. Mr. Fujimori, a former senior executive at General Electric Co.--another company known for aggressive acquisitions--took the helm of Lixil in 2011.
Dusseldorf-based Grohe, meanwhile, employs about 9,000 people and last year recorded EUR273 million in adjusted earnings before interest, taxes, depreciation and amortization on revenue of EUR1.4 billion. It has a worldwide market share of roughly 8% in the sanitary fittings market.