When U.S. flooring manufacturer Mohawk Industries acquired Italian tile maker Marazzi in 2013, it was expected that the merger would make Mohawk the worldwide leader in ceramic tiles. For Mohawk treasurer Shailesh (Shaila) Bettadapur, however, the deal had a different significance altogether — it marked the moment at which the company’s European treasury needs outgrew the banking arrangements they had in place.
2013 had been a standout year for Mohawk. The Marazzi deal was just the latest in a series of acquisitions that together totaled $1.8 billion. Bettadapur, who had joined Mohawk in 2010 and been closely involved in its expansion, had been aware for some time that the existing arrangements in Europe could be improved.
Essentially, the company was using the structures it inherited when it bought the Belgian laminate flooring manufacturer Unilin in 2005. As Mohawk’s European needs grew in scale and complexity, Bettadapur needed a banking provider that could offer him clear visibility into European treasury operations from his desk in Atlanta, GA.
After a competitive bid, he turned to Bank of America Merrill Lynch (BofAML), where director Tom Murphy was ready to work out a structure that could deliver what Mohawk needed.
Mohawk was already concentrating European cash and liquidity through its main Luxembourg subsidiary, Mohawk International Holdings SARL, but BofAML was able to improve its efficiency. The realtime sweep eliminated the need for multiple daylight overdrafts within the cash pool. At the same time, BofAML also took on Mohawk’s pan-regional payments and receipts activity.
The new structure, managed in Luxembourg by European treasury manager Darragh Connolly, delivers the visibility required while also being flexible enough for any future acquisitions to be added relatively quickly.
STANDARDIZING EXPENSES PROCESSING
The second piece of the new solution was to standardize the processing of expenses through a travel and entertainment (T&E) card program, while at the same time offering the trans-Atlantic visibility Mohawk needed. Up until that point, neither Unilin nor Marazzi had deployed a card program for traveling employees.
Today both companies use T&E cards from BofAML, with data accessible through BofAML’s Global Reporting and Account Management (GRAM) tool. A further enhancement is the Lodge Card, used by Unilin with its travel agent. Marazzi and Unilin have each also chosen to brand their cards with their own unique company identities, helping drive take-up and usage of the cards among their respective personnel.
As the card programs develop, Mohawk is already looking at some of the newer technologies available to further enhance the flow of data around purchases — in particular, Purchase Control, which enables companies to capture enhanced upfront data for seamless reconciliation, as well as gaining greater control over purchases made by embedding the solution within existing procure-to-pay procedures.
FLEXIBLE, INTEGRATED SYSTEMS
Tying these projects together is an over-riding requirement for global visibility and control, which the BofAML team is meeting by integrating systems as disparate as SAP and Workday with Mohawk’s Kyriba treasury management system and its own CashPro® and TradePro®, using host-to-host connectivity through XML. Where some parts of the business are still transitioning to XML data formats, they can in the meantime participate by uploading their own electronic files to CashPro.
As Murphy explains, “The purpose here, from Mohawk’s perspective, is to get visibility and a degree of control through one platform for global bank accounts, both BofAML and non-BofAML. So we give host-to-host reporting and actually generate treasury payments on a host-to-host basis from Kyriba as well.”
For Bettadapur, the task of managing corporate treasury for a business that has grown exponentially since he arrived in 2010 has been made a great deal easier by the flexible, integrated systems put in place with BofAML.
Perhaps still more important, with merger and acquisition activity showing little sign of slowing down, and recent buys including IVC, Kai and Xtraherm, the work done today by BofAML will make tomorrow’s acquisitions that much easier to integrate into a rapidly growing, successful, global business with a treasury operation to match.
Case studies are for illustrative purposes only and intended to demonstrate the capabilities of Bank of America Merrill Lynch. You should not consider these case studies as an endorsement of Bank of America Merrill Lynch. Case studies do not necessarily represent the experiences of other clients, nor do they indicate future performance. Results may vary.
- Following a merger, Mohawk realized their European treasury requirements had outgrown current banking arrangements
- They needed clear global visibility of cash and payments, so turned to BofAML
- Our integrated solution increases visibility and efficiency, with flexibility to integrate future acquisitions