Düsseldorf, Frankfurt Villeroy & Boch has succeeded in the largest takeover in the company’s 276-year history: According to a statement on Monday, the Saarland porcelain group is taking over rival Ideal Standard for 600 million euros. Industry experts see this as a favorable purchase price. Villeroy & Boch is one of the oldest industrial companies in Germany.
Consumers primarily know the company for its coffee services. However, Villeroy & Boch generates two thirds of its sales, which recently totaled 994.5 million euros, from washbasins and toilets. In the past, the division called bathroom and wellness was often the much more profitable. Here Villeroy & Boch competes with Grohe, Hansgrohe and Geberit.
“With the merger, we will now become one of the largest players in the bathroom sector on the European market in terms of sales,” said CEO Frank Göring. In 2007 he was the first non-family manager at the top of the company. With the acquisition, which is scheduled to be completed in 2024, Villeroy & Boch would increase its sales by more than three quarters – to over 1.7 billion euros.
Villeroy & Boch had been working on the acquisition for some time. Corresponding plans were already made public at the beginning of 2020. But in March 2021, management rejected the plan again. At the time it was said that the founding families did not agree on the strategy. Villeroy & Boch is listed on the stock exchange, but the owner families have all voting rights.
At that time, parts of the family advocated the takeover in order to grow. Because competitors developed faster and are more profitable. For other family members, however, the risk was too great. After all, Ideal Standard, with recent sales of 737 million euros, is almost as big as Villeroy & Boch.
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Ideal Standard was also considered a restructuring case. The Belgian manufacturer of bathroom fittings and ceramics belonged to the financial investor Bain Capital until 2018, but the latter saddled the company with high debts. Creditors Anchorage and CVC Credit Partners converted their bonds into equity and have been in charge ever since.
These two private equity owners have made Ideal Standard very efficient in recent years, people familiar with the deal told Handelsblatt. Villeroy & Boch buys Ideal Standard from the holding company of the two companies, old debts are cut off before the takeover. The company is to be reduced in debt by 325 million euros as a result of the takeover.
This may have contributed to the success of the transaction this time. Villeroy & Boch wants to finance the takeover, among other things, with new debt equal to its own market value – 250 million euros.
Villeroy & Boch hopes for new growth potential
Industry observers have considered the merger to have made good business sense since the first project. The competitors are complementary in terms of both regions and product offerings: Villeroy & Boch is primarily anchored in Central and Northern Europe as well as in Asia. Ideal Standard has a very strong presence in the UK, Italy, the Middle East and North Africa.
The German company’s offering is aimed primarily at upscale private customer business. The Belgian producer, on the other hand, is particularly active in the project business for public providers, the healthcare sector as well as for hotel and commercial properties and brings in a highly profitable fittings business.
Andreas Schmid, Chairman of the Supervisory Board of Villeroy & Boch, hopes to tap into new potential. “The bathroom industry remains a dynamic, global growth market, but in which economies of scale will increasingly be important for competitiveness and future investments.” Schmid even spoke of the beginning of a new era for the bathroom and wellness sector.
Due to the weak construction economy, Villeroy & Boch expects sales to fall to between 935 and 965 million euros and earnings before interest and taxes (EBIT) between 87 and 92 million this year. The company will benefit in the future from the fact that Ideal Standard is more involved in the Middle East, where the construction industry has not collapsed.
Villeroy & Boch employs a total of 6,400 people at 13 locations, including four branches in Germany. Ideal Standard has over 7,000 employees in eleven locations in Europe and the Middle East. They will work for Villeroy & Boch after the transaction is completed.
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