February 17/24, 2020: Volume 35, Issue 17
By Ken Ryan
Marquis Industries has completed the acquisition of Lonesome Oak Trading Company and its storied Gulistan brand in a deal that also expands the Stainmaster PetProtect brand through the specialty retail channel.
The acquisition of Lonesome Oak is expected to increase Marquis Industries’ (Live Ventures is the holding company) revenue by approximately 50% in its manufacturing segment to roughly $140 million per year. “We believe Lonesome Oak will be a great bolt-on acquisition for Marquis Industries,” said Wes Godfrey, CEO of Marquis Industries. “Lonesome Oak and Marquis have complementary lines of business, which we believe will enable Marquis to grow and realize significant operating and cost synergies with the ultimate goal of sustainably increasing free cash flow.”
A significant piece to the acquisition is Gulistan, which has Stainmaster PetProtect (Marquis does not). Chet Graham, president of Marquis, said the company will continue with the Stainmaster brand and expand the product line offerings into all divisions. “This will open up some new retail channels for us,” he told FCNews.
Gulistan is a venerable brand that began manufacturing carpet in 1924 but closed its doors in Aberdeen, S.C., in 2012. However, Chad McIntyre, founder of Lonesome Oak Trading Company, acquired the Gulistan name and relaunched the brand at Surfaces in 2018.
Gulistan’s strategy had been to selectively choose its flooring dealer partners, offering higher profit margins on the strength of its extrusion capabilities that provide unique colors and yarn systems that are exclusive to Gulistan.
Flooring retailers say the deal will make Marquis a much stronger force as a mid-level mill. “Marquis gives Gulistan instant operating capital and an aggressive sales team on the streets, which should help them gain market share,” said Mike Foulk, owner of Foulk’s Flooring America, Meadville, Pa.
Olga Robertson, president of the FCA Network, Shorewood, Ill., said some of her members buy from Marquis. “Marquis makes pretty carpet, and the acquisition of Lonesome Oak/Gulistan gets them into Stainmaster nylon,” she said.
Graham said that while Marquis preferred to grow organically, the synergies between the two organizations were too good to pass up. He noted, however, that Marquis and Lonesome Oak/Gulistan will continue to market their brands separately to their respective dealer partners. “This is a very nice integration—the merger will be seamless,” he said. “Lonesome Oak runs a very streamlined organization, and we are absolutely a streamlined company. We see a lot of opportunities ahead for us. They have nice, updated tufting equipment such as LCL machines and graphic tufting lines. The addition of LCL styling and branded fiber will enable us to continue to grow in soft floor covering, and we will be able to improve on the hard surface side with our synergies as well.”
Both companies have a growing presence in WPC, SPC and rigid vinyl planks. Lonesome Oak, which was founded more than 25 years ago, entered the rigid core/SPC space in recent years. Marquis has been an LVT supplier longer and has been growing steadily, Graham said.
The Marquis deal is the latest in a series of acquisitions impacting the carpet market in recent years. This followed on the heels of Mannington’s purchase of Phenix Flooring, marking Mannington’s entry into the residential carpet space. Back in 2017, Engineered Floors purchased Beaulieu’s assets, catapulting EF to the No. 3 revenue position among carpet mills.