The trend of the acquisition in the E-stone industry

Details
Dates:
26 May, 2021
The E-Stone sector has been marked by many acquisitions in recent years: is this a good or a bad sign?
IS THIS A GOOD OR A BAD SIGN?
Often outsiders misinterpret corporate acquisitions as a situation of malaise in a specific sector, as it is believed that they are caused by economic/financial difficulties of the companies being sold that operate in that sector which, consequently, is supposed to be in crisis or at least not growing.

In some cases, however, this is not true.

This is precisely the case of the Engineered Stone Industry, the world's best-known and most widely used material for the production of kitchen and countertops, which has seen some major acquisitions in recent years:

 
  • In December 2015 the Brazilian Guidoni Group acquired Seaquarz in Spain
  • In December 2018 the Korean Hyundai Department Store Group acquired Hanwha L&C, which has manufacturing plants in South Korea and Canada
  • In January 2019 the Korean Lotte Advanced Material acquired majority stake in Belenco, Turkey
  • In August 2019 the American Wilsonart Engineered Surface acquired Technistone in the Czech Republic
WHO ARE THE COMPANIES THAT INVESTED?
These four acquisitions have all been carried out by large companies which were already present in the kitchen countertops sector and that consciously decided to acquire companies in the same industry. Most of these companies, at the time of their acquisition, were booming and had very positive balance sheets.

The reasons for the divestiture are many but can be traced back to situations where the ownership and/or management felt that the business had become too challenging to ensure adequate growth and development for the company. 

The large companies that have believed and invested in the Engineered Stone industry are giants in the world of quartz-resin countertops for kitchens and furniture in general.

 
WHY DID THESE LARGE GROUPS DECIDE TO INVEST?
  • Guidoni Group is the largest exporter of rocks in Brazil and one of the largest worldwide. The know-how acquired from the industrial process culminated in the creation of Topzstone, an exclusive brand of quartz surfaces. When Guidoni Group acquired Seaquarz - a Spanish company that produced quartz-resin slabs with a Breton plant - it already had two plants in Brazil for the production of quartz-resin slabs, supplied by a Chinese manufacturer.
Shortly after acquiring Seaquarz in 2018, Guidoni Group invested in a second Breton plant to be installed in the same facility in Spain. In 2020, it then decides to invest in a further Breton plant for the production of super-jumbo plates to be installed in Georgia (USA).
 
  • Hyundai Department Store Group: it is a major South Korean conglomerate operating in retail, manufacturing and service-based businesses. Hanwa L&C (today called Hyundai L&C) was a leading manufacturer and distributor of premium building materials. The acquisition led to further positioning Hyundai L&C as a global leader in the interior products industry, becoming a total living interior cultural company. 

In 2018, when Hyundai L&C was acquired, it was manufacturing quartz-resin slabs with two Bretonstone plants, one in South Korea and another one in Canada. Just one year after this acquisition, Hyundai invested in a third Bretonstone plant and installed it in its Canadian plant; it then invested in another Bretonstone plant to be installed in South Korea in 2021.
 
  • Lotte Advanced Material: it is a subsidiary of the South Korean company Lotte Chemical. They manufacture cutting-edge plastic materials and construction materials - solid surfaces, quartz surfaces and porcelain surfaces.
For the production of quartz-resin slabs, they used a Chinese plant installed in South Korea where Breton had already replaced most of the equipment for the slab-forming process.
In 2019, Lotte acquired Belenco, a Turkish company that was founded in 2010 with a Bretonstone plant for the production of quartz-resin slabs and had invested in a second Bretonstone plant in 2016. At the time of the acquisition, Belenco had recently confirmed to Breton the purchase of a 3rd Bretonstone plant for the production of quartz-resin slabs - already commissioned.

 
  • Wilsonart Engineered Surface: it is an American world-leading engineered surfaces company. It manufactures and distributes High Pressure Laminate, Quartz, Solid Surface, Coordinated TFL, Edge banding and other decorative engineered surfaces for use in the office, education, healthcare, residential, hospitality, and retail markets.
When Wilsonart acquired Technistone they didn’t have any plant for manufacturing quartz-resin slabs, but they had a huge distribution network in the US to sell this product.
Technistone is a company from the Czech Republic, a historic producer of quartz-resin slabs using two Bretonstone plants, the latest of which started up in 2017 and with ambitious expansion plans for the near future.

 
A COMMON STRATEGY
Although these acquisitions may seem different, they all have interesting aspects in common:
  • These are large industrial groups that have consciously decided to enter or strengthen themselves in the Quartz-Resin business, encouraged by the exponential growth this sector is experiencing and with the desire to become leaders in the industry.
  • Each of these groups decided to acquire companies producing quartz-resin slabs that used exclusively Breton technology and equipment.
  • Some of these (Guidoni and Lotte) were already in the quartz resin industry using Chinese plants and have chosen to invest in companies equipped exclusively with Breton plants.
AN UCONVENTIONAL CASE
Another interesting and in some ways unconventional case is the acquisition by a large Chinese company operating in the natural stone, marble-resin and quartz-resin sector of an Italian company in the marble-resin and quartz-resin sector.
The Italian company is Quarella, one of the world leaders in the production of quartz and marble agglomerates, founded over 50 years ago in Verona and which, over the years, has achieved global prestige, thanks to a wide range of products made entirely with Breton plants. In the years 2014-2015, however, Quarella faced significant financial difficulties presumably due to the failure to update the plants technology over the years, which greatly compromised the possibility of being able to offer new products that in recent years have contributed to the strong growth in volumes, especially in high-end markets.  
In 2015 the management of Quarella passed to the newco QRBG srl, created by a joint venture between Rykadan Capital Limited and Best Cheer Stone Group (China). Finally, in 2017 QRBG completed the acquisition process of Quarella.
The Quarella brand was in any case considered by Best Cheer as fundamental in order to be able to import into China - its main market - products of recognised high quality and despite being a Chinese company, it preferred the acquisition of a company with Breton plants and technologies.

If we also consider the fact that no major group with an internationally renowned brand has so far acquired any quartz-resin slab manufacturers with Chinese plants, it is clear that even large industrial groups have perceived an increasingly interesting future in the business of quartz-resin slabs, and have decided to enter this market or increase their current business, but only by acquiring companies in the sector with Breton plants, evidently because they are considered reliable and successful and in which they can invest without risk or unexpected events.

 
BRETON COMMITMENT
At Breton we are very pleased and proud of such examples, and we believe they are also proof that commitment, determination, seriousness and professionalism always pay off.
Breton invented the Bretonstone technology for producing quartz-resin slabs many years ago, and has always continued to invest and work hard to bring continuous innovation to this sector, without paying too much attention to those who try to copy them. With its plants, Breton has wanted and still wants to give its customers the opportunity not only to be quickly successful, but above all to be leaders in their own business and therefore to be able to lead change themselves without being forced, as others have to do, to keep running after it.




Giancarlo Crestani

Sales Director 
Engineered Stone Division

 

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