RAK Ceramics, a global hi-tech leader of lifestyle ceramics solutions, announced yesterday that it has successfully completed sale of its 51% share in RAK Laticrete to Laticrete International for Dh48.1 million, after executing the initial MoU between the two companies.
The transaction also includes the distribution of dividends for an additional amount of Dh8.6 million. Total gross proceeds from the sale transaction will be Dh56.7 million. The proceeds will be used to expand high margin sanitary ware operations in RAK Ceramics' Focus Markets of the UAE, India and Bangladesh.
In 2003, RAK Laticrete, a joint venture between RAK Ceramics and US based Laticrete International, was formed to manufacture tiling installation systems and waterproofing products and was a successful and profitable business venture for more than 10 years. With an exit EV/EBITA multiple in excess of 8 times, RAK Ceramics will recognise a Dh37.6 million gain on sale of this joint venture.
Commenting on this successful transaction, Abdallah Massaad, RAK Ceramics CEO, said, "In 2003, we recognised the potential of Laticrete's contribution to the Middle East market and hence our joint venture was created. We worked closely with the management to identify potential opportunities which added significant value to RAK Ceramics' brand name. We had a highly successful partnership and we believe that both companies are currently in a win-win situation. RAK Ceramics for receiving a premium on the sale transaction and Laticrete International for buying a valuable company that has been a success story in the industry over the last 12 years."
"RAK Ceramics has been an excellent partner in the UAE and throughout the region, said Erno de Bruijn, President, International Division of Laticrete. "We made the strategic decision to extend the scope of our activities beyond the world of ceramic tiles and stone. Through acquisitions and organic growth, Laticrete has experienced tremendous international expansion and we are confident that by focusing on new product offerings and enhancing our operations in the Middle East, we will continue to grow."
RAK Ceramics continues to pursue its ‘Value Creation Plan' that was set in 2014 to exit from non-core and non-strategic business which reduces its profitability, and to exit from activities that are not related to the four core-operations, of tiles, bath ware, tableware and faucets.