Updated, 8:25 a.m. |
LONDON - The Japanese building products company Lixil and the Development Bank of Japan agreed on Thursday to buy the German bathroom fittings company Grohe for 3.06 billion euros ($4.1 billion).
Under the terms of the deal, Lixil and the Development Bank of Japan will acquire an 87.5 percent stake in Grohe, which manufactures premium-price faucets, shower heads and other bathroom fittings. The sellers are the private equity firms TPG Capital and DLJ Merchant Banking Partners, a unit of Credit Suisse.
The deal is the second this month to involve a Japanese acquisition of a European company. Suntory Beverage and Food recently agreed to buy two British brands, Lucozade and Ribena, from the drug maker GlaxoSmithKline for £1.4 billion ($2.2 billion).
The multibillion-dollar takeover of Grohe represents the largest ever deal by a Japanese company in Germany, Europe’s largest economy, according to the data provider Thomson Reuters. The sale is more than double the previous record, held by the technology company TDK, which bought its German rival Epcos for $1.9 billion in 2008.
For Lixil, which produces a range of bathroom, kitchen and other building products, the deal helps to expand its footprint, particularly in Asia, where Grohe already has operations in China, Indonesia and Thailand.
“Grohe is one of the most well-known brands in the global sanitary market,†Lixil’s president, Yoshiaki Fujimori, said in a statement on Thursday.
The future of Grohe, which employees around 9,000 people worldwide, had been uncertain for months after its private equity owners had contemplated either selling the company or potentially floating it through an initial public offering.
TPG Capital and DLJ acquired Grohe in 2004 for 1.5 billion euros. Grohe’s pretax profit last year rose 18 percent, to 273 million euros, while annual revenue also rose 21 percent, to 1.4 billion euros.
“Lixil is a perfect match,†Grohe’s chief executive, David Haines, said in a statement.
Lixil, best known in Japan as a maker of doors and windows, as well as toilets and plumbing fixtures, grew out of the merger of the building material giants Tostem and Inax in 2001. It was known as the Tosten Inax Holding Corporation until 2011. The company, based in Tokyo, has expanded aggressively in recent years through a number of international acquisitions
This year, Lixil agreed to buy the bathroom fixtures firm American Standard Brands for $342 million. In 2011, it bought the Italian construction company Permasteelisa for around 573 million euros.
Expanding overseas sales is especially important for Lixil, which faces a shrinking housing market in aging Japan. Analysts expect a temporary jump in housing-related industries next year as consumers race to beat a planned rise in Japan’s consumption tax rate in April.
But in the longer term, the Japanese market is expected to shrink as the overall population falls. The company says it hopes overseas markets will eventually account for as much as a third of its sales, from less than 15 percent last year. Over all, the company aims to expand revenue to 3 trillion yen in the midterm, from 1.4 trillion yen in the fiscal year ended March 31.
To finance the Grohe deal, which is expected to close in the first quarter of 2014, Lixil has secured about 220 billion yen in loans from Japan’s three biggest banks, including the Mitsubishi UFJ Financial Group.
Lixil joins a steady march of Japanese firms buying foreign companies, though the pace of Japan’s overseas acquisitions has slowed somewhat this year, thanks to a weaker yen.
Acxit Capital Management, Credit Suisse, Goldman Sachs and the law firms Weil, Gotshal & Manges and Clifford Chance advised Grohe, TPG Capital and DLJ, while BNP Paribas, Moelis & Company, SMBC Nikko and the law firm Linklaters advised Lixil.
