Sevlievo-based sanitaryware manufacturer Ideal Standard - Vidima, which is one of the largest companies in the machine and equipment sector in Bulgaria with a turnover of close to 500 million levs (about 250 million euro), will become part of Germany's Villeroy & Boch. The merger is the result of an agreement for the sale of the operating companies in the Ideal Standard group at an overall evaluation of 600 million euro. The transaction will create one of the leader bathroom product manufacturers in Europe with a 1.4 billion euro revenue and 13,400 employees.
That is the second attempt at striking a deal between Villeroy & Boch and Ideal Standard after the previous one failed in 2021. Now the companies have managed to reach an agreement and the transaction is expected to be completed in early 2024.
Villeroy & Boch has signed binding agreements to acquire the operating companies in the Ideal Standard group, the German company said in a press release on September 18. The shares are being sold by corporations under the management of Anchorage Capital Group and CVC Credit Partners. The acquisition price is based on a company valuation of approximately 600 million euro. That is 8.1 times the adjusted EBITDA for 2022, which amounts to 74 million euro.
The transaction is subject to the usual regulatory reviews and approvals as well as the successful redemption of the 325 million euro bond issued by Ideal Standard International, Villeroy & Boch said. The German group will finance the transaction with own funds and borrowing of 250 million euro. The buyer plans to keep Ideal Standard's management team on board.
Villeroy & Boch expects that the merger will create a powerful combination of complementary established brand and sales strategies with synergies exceeding 35 million euro. Geographically, both companies are present in Central Europe but the German group is also strongly positioned in Northern Europe and Asia, while Ideal Standard has developed markets in the UK, Italy and the Middle East and North Africa (MENA) region.
The companies also have complementing product portfolios. Apart from ceramic products, Ideal Standard comes with an established fitting business, which generated more than a third of the revenue in 2022. Fittings are manufactured in the Bulgarian plant in the town of Sevlievo, too. Currently bathroom fittings account for just 8% of Villeroy & Boch's sales but after the merger the business will generate 24% of the revenue of the united group. The German company is focused primarily on the premium residential business, while Ideal Standard has strong expertise in the project business, including the public sector, healthcare and large residential, hotel and commercial properties.
As a result of the merger, the revenue of Villeroy & Boch's Bathroom and Wellness Division will double to 1.4 billion euro. Including the Dining & Lifestyle business, sales will increase to over 1.7 billion euro, the company said. The revenue of Villeroy & Boch was 995 million euro in 2022 and that of Ideal Standard amounted to 737 million euro.
Strong Bulgarian presence
Ideal Standard sells products in over 100 countries and has more than 7000 employees. Its production facilities are located in Bulgaria, Egypt, the Czech Republic, Italy, Germany and the UK.
The Bulgarian plant, Ideal Standard - Vidima, was set up in 1992 as a joint venture between Bulgaria's Vidima and American Standard. In 2007 American Standard sold its sanitaryware business to Bain Capital and Ideal Standard International was established. In 2014 another large investor joined in, Anchorage Capital, which bought out Bain's shares in 2018 together with CVC Credit Partners. The group is headquartered in Brussels.
Ideal Standard - Vidima is one of the largest companies in the machine and equipment sector in Bulgaria, as well as a big employer with some 3,000 workers. In 2022 its revenue increased 9% to 496.5 million levs but the company booked a net loss of 9.2 million levs.
At an event in Sevlievo in September Jan Peter Tewes, CEO of Ideal Standard International, said the Bulgarian factory, with its output capacity of 2.5 million sanitaryware products, would remain a crucial part in the development of the expanded business.