Marazzi: Permira and Private Equity Partners take 33% stake

Oct 28, 2004

28/10/04 – Following an agreement announced yesterday in Milan for the acquisition of 33% of the capital of the world’s largest ceramic group, the funds Permira and Private Equity Partners will be the Marazzi family’s new financial partners.

In accordance with the management’s strategic plan, the two funds (short summaries provided in the in-focus section) have acquired stakes in Marazzi Gruppo Ceramiche (28% and 5% respectively).
Michele Preda, who has been the Group’s vice chairman since last year and is one of the architects of the project, will acquire a 2% shareholding in Marazzi.

The new partners will provide strong support to the Group’s 2004-2006 industrial plan, which focuses on achieving further international growth both in traditional markets (particularly the United States) and in emerging markets such as China, Russia and the Far East.
Another objective is to progressively increase revenues and profitability through major investments in production capacity in Russia and the United States. (see in-focus section)

“The shareholdings acquired by Permira and Private Equity Partners will facilitate the implementation of the chosen development strategy,” explained Filippo Marazzi, Chairman of Marazzi Gruppo Ceramiche, “particularly given the know-how, prominence and authority of the new partners.”

The influx of new capital is the first step towards the objective of floating the company on the stock market within a period of 3 to 5 years.
The evaluation of the Group was performed on the basis of a value in line with turnover. A component of the price will be paid at the time of flotation.

The results for the first half of 2004 were also announced yesterday, including 5.2% growth in turnover compared to the same period in 2003. (The in-focus section provides the other economic indicators).

fmarazzi.jpgThe Marazzi Group’s new production investments abroadThe Marazzi Group’s new production investments abroad

In the United States the Marazzi Group recently completed major investments aimed at increasing the production capacity of the Monarch facility in Florence, Alabama. Output is now 8 million sq.m of porcelain tile a year, bringing total production in the USA to 18 million sq.m.

In Russia, a new factory is scheduled to begin production at Malino during the first few months of next year.

The Group also recently began an activity in China with a sales company based in the Foshan cluster, Marazzi China, which will open the way for other initiatives in the world’s largest market.The Marazzi Group’s half-yearly reportThe Marazzi Group’s half-yearly report

Marazzi Gruppo Ceramiche closed the first half of 2004 with a consolidated turnover of about 408.1 million euro, 5.2% up on the same period in 2003. The Group’s profitability is rising constantly.

It announced a gross operating margin (Ebitda) in the half year period of about 58.3 million euro, 30.7% up on 2003, and an operating income (Ebit) of 33.2 million euro (up 57.3%).

The Marazzi Group is the world’s largest ceramic tile manufacturer with a presence in 130 countries, a 2003 turnover of 750 million euro, more than 4,000 employees and 18 factories located in Italy, Spain, France and the United States.PermiraPermira

Permira is one of the leading international players in the private equity sector.

With more than 90 professionals working at its offices in Milan, London, Frankfurt, Paris, Madrid, Stockholm and New York, Permira provides consulting support to the Permira Funds, which currently have a capital of 11 billion euro.

The latest fund, closed in October 2003, is Permira Europe III. With a capital of 5 billion euro, this is Europe’s largest private equity fund.Private Equity PartnersPrivate Equity Partners

Private Equity Partners S.p.A is a leading Italian merchant bank founded and controlled by Fabio Sattin and Giovanni Campolo.

Through its SGR (savings management company), it manages the JP Morgan Italian Fund III which specialises in venture capital investment activities in unlisted Italian companies with the objective of supporting their development and internationalisation processes, including preparation for flotation.