ELK GROVE VILLAGE, ILL.—While acquisitions are generally reserved for the end of the year as companies push to get them in for tax purposes, 2014 has started off with a bang, at least at the distribution level. First, the industry’s largest wholesaler, JJ Haines, announced it was purchasing CMH Space, which was already considered to be the No. 2 flooring distributor in sales.
Shortly thereafter, All Holdings, the parent company of All Tile and another top industry distributor, announced it was purchasing Carpet Cushions & Supplies (CCS), giving them a combined capacity to make it a Top 5 wholesaler. Both All Tile and CCS service the Midwest, and combined they will service over 5,000 retail accounts through 22 facilities in 14 states with annual sales topping $150 million.
Floor Covering Installer senior editor Matthew Spieler caught up with Bob Weiss, CEO of All Holdings, and president and CEO of All Tile, to discuss the purchase as well as what it means for both companies and the industry.
How did this deal come about? Who approached whom?
The acquisition did not occur overnight. The concept of All Tile and CCS getting together has been in the making for over 10 years. It became more of a functional reality over the summer.
What were the reasons/advantages behind aligning the two companies?
All Tile and CCS are very complementary. One handles flooring products that are visible (All Tile), the other (CCS) handles products that are mostly under the surface, with the exception of Roppe. There is very little if any crossover of product offering outside of carpet pad. In addition, the combined logistical channel will bring greater service levels to both of our customer bases.
The two companies overlap in Illinois, Wisconsin, Missouri, Kansas, and northern Indiana/Ohio. Since we cross over only with some carpet pad the companies are a perfect complement to one another. The branch structure is pivotal to the CCS model and will be going forward also.
What about products? Is there the chance All Tile could carry a product CCS has that it didn’t have prior to the acquisition and vice versa?
No. Each company will be truly independent. This is a permanent plan. Certain CCS facilities will be used for the convenience of our customers to pick up their orders. But All Tile products will be sold through All Tile, and CCS products will continue to be sold through CCS.
CCS has tremendous brand equity and is the dominant name in flooring supplies and carpet cushion, and we plan on leveraging that strength by maintaining the CCS name.
All Tile and CCS are both great at what they do. By having common ownership, both can benefit from scale and best practices. All Holdings is the new holding company that owns both All Tile and CCS. This is where direction is set for both companies and synergies can be found, such as in logistics, benefits and systems.
Jeff Karsen, who founded CCS with his father in 1979, is reported to be staying on as the head of CCS. How will the company structure be set?
Yes, Jeff is staying on board. He will be keeping the same functionality and will have the responsibilities of president of CCS, reporting to me, as the CEO of CCS. My title of president and CEO of All Tile will remain along with my current functions.
Is All Holdings in a buying mode, or was this just one of those opportunities that came along and you couldn’t pass it up?
This is plenty to chew on for a while. There is plenty to do in our respective marketplaces to keep us busy. Our goal is to service our customers and grow our business. We also have a job to do for the manufacturers that we represent, which is to service our areas of responsibility the best that we can.
That being said, if opportunities present themselves that will make the companies stronger, they will be explored.
In just the first quarter of 2014 we’ve seen two major purchases within the distribution ranks. Do you see more of this happening?
This acquisition is not revolutionary. It is more evolutionary. Many supply distributors have added flooring. Many flooring distributors have added supplies.
Jeff Karsen and his team grew CCS both organically and through acquisition as a supply and cushion distributor. All Tile was able to grow in the same way.
By adding a strong regional supply distributor to a strong regional flooring distributor, All Holdings is now a very strong regional flooring supplier for the long term. Both companies have similar philosophies with regard to going to market, and they will continue.
It is a tough market out there. If we are to continue to remain in business, we have to supply products and services to our dealer base that allows them to compete against anyone that sells flooring. To that end, it is essential that both All Tile and CCS be able to provide our customer bases with products and systems that will allow for that. By increasing size, we will be able to refine systems and lower the ultimate cost to market, which will benefit our customers as well as our suppliers.