Lixil to buy Grohe in $4 billion landmark deal

Thu Sep 26, 2013 3:25pm EDT
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By Nathan Layne and Christiaan Hetzner

TOKYO/FRANKFURT (Reuters) - Germany's biggest bathroom fittings company, Grohe, has been snapped up by Japanese building products group Lixil (5938.T: Quote) in a $4 billion deal including debt, the largest ever investment by a Japanese company in Europe's biggest economy.

Lixil's leveraged buyout of Grohe from financial investor TPG Capital TPG.UL and Credit Suisse's CSGN.VX private equity arm highlights renewed appetite among Japanese companies for foreign acquisitions following a slowdown in the pace of dealmaking blamed on a weak yen.

Lixil Group Corp has formed a 50-50 joint venture with the state-backed Development Bank of Japan (DBJ) to buy 87.5 percent of Grohe GROH.UL, creating a global group with more than 4 billion euros in annual sales. The deal is expected to close in the first quarter of 2014.

Grohe will give Lixil the footprint in Europe it was seeking and help it expand in China through Joyou JY8G.DE, a Grohe bathroom fittings unit that sells through 4,000 distributors in Asia's largest economy.

Lixil Chief Executive Yoshiaki Fujimori said the acquisition would fill out a global network built on its 575-million-euro deal for Italian curtain walling maker Permasteelisa in 2011 and its $542 million purchase of U.S. toilet and fixtures maker American Standard earlier this year.

"With this deal we have secured a global platform," said Fujimori, a former General Electric (GE.N: Quote) executive who has put Lixil on a path to growth through acquisitions since taking the helm two years ago.

Grohe's private equity owners, who purchased the German maker of high-end bathroom and kitchen fixtures for 1.5 billion euros in 2004, had also been considering a stock market listing alongside efforts to sell the company.

Lixil, formed by mergers of several Japanese building product makers with a product line-up ranging from high-tech toilets to window frames, said the deal valued all of Grohe at 3.06 billion euros, or 10.3 times its 2013 earnings before interest, taxes, depreciation and amortization.   Continued...

A shower head of Grohe, Europe's biggest bathroom installations maker, is displayed at the company showroom in Duesseldorf September 26, 2013. REUTERS/Ina Fassbender