Hicksville, N.Y.—For years, analysts and industry observers have speculated that Pergo would be sold. That predication looks as if it has finally come true as German Pfleiderer AG, the parent company of Canada’s Uniboard, submitted a takeover offer that Pergo’s board is encouraging shareholders to accept.

The cash offer, valued at approximately $US400 million, represents a 13.6% premium compared to the closing price on Jan. 11 of Pergo’s stock on the Nordic Stock Exchange, and a 17.2% premium based on the stock’s average price during the previous 20 days.

Bertil Villard, Pergo’s chairman, said the board made the recommendation based on the opinion “it represents a good value to Pergo’s shareholders and, at the same time, secures Pergo’s possibilities to maintain or even improve it’s leading position in the on-going consolidation of the global laminate flooring industry. Pfleiderer, as a strategic owner, will give Pergo the resources and opportunities it deserves to develop it’s business to the benefit of Pergo’s customers, employees and future partners.”

Tony Sturrus, Pergo’s CEO, added, “We view Pfleiderer as a great source to help leverage Pergo’s leading brand and retail position by providing a superior technological and cost competitive manufacturing base. The combination would truly result in a vertically integrated global manufacturing and marketing powerhouse.”

He told FCNews Pergo and Uniboard have a history of working together as the Canadian mill was a major supplier up until two years ago when Pergo opened its own facility. “We know the company and the people; we collaborated on many things from product design to manufacturing technology, so this will not be a culture shock to anyone.”

In addition, Sturrus said based on Pfleiderer’s panel board operations, the deal will make Pergo a totally verticaly integrated company, putting it in position to be a low-cost supplier in an ever competitive market. And, having a strategic owner will create stability in a company that has been tossed around the rumer mill for years.

According to Hans Overdiek, CEO of Pfleiderer, the acquisition of Pergo would create a company with global sales of about US$2.46 billion and make Pfleiderer the number one laminate floor supplier in the U.S. with a market share of approximately 15%.

Final figures were not available at press time, but Pergo’s 2006 global sales are expected to be $430 million, with a little more than 61% of that, or about $262 million, coming from North America.

“The combination of Pfleiderer and Pergo is industrially sound and forms a leading player in the laminate flooring market,” he said, “combining the industrial strength of Pfleiderer as one of the top globally operating engineered wood companies and Pergo as the brand leader in laminate flooring.”

Overdiek told Bloomberg that with Pergo added to the fold, the company “can cover the total U.S. area excellently,” noting that since early last year it has been looking for a production site in the southern part of the country to complement its facility in Montreal.

“It’s an almost perfect complement,” he said during a news conference, “because there are almost no overlaps in the businesses”

In a press release, Pfleiderer stated that in North America the enlarged group will be “a leading fully integrated laminate flooring producer. The combination brings together two of the leading brands in the market, Uniboard and Pergo, each with its own distribution network and customer base, and better positions both companies to compete successfully in the North American market.”

The company said it intends to maintain both brands and leverage the distribution base of each to increase overall market penetration and sales. “The integration of Pergo’s North American laminate flooring production base with Pfleiderer’s fully integrated operations will also bring production efficiencies, increased capacity utilization and significant cost savings.

“Furthermore,” it noted, “Pfleiderer expects to benefit from the combination of both operation’s technical know-how and, in the future, the joint development of new technologies and products.”

Both Pergo and Pfleiderer stressed the German company is not making the purchase with a view of closing down any Pergo plants, and that the company’s employees “are, and will continue to be, of great importance for the successful development of the enlarged group.”

They also note that once the deal is complete, which is expected by the end of this quarter, Pfleiderer will work with the management of Pergo to continue the development of Pergo’s operations.

Headquartered in Neumarkt, Germany, Pfleiderer is a leading producer and supplier of engineered wood products. It operates 20 production sites, geographically organized in three business units, with eight plants in Western Europe, four in Eastern Europe and eight in North America.

The company said its strategy has been to leverage its position and grow the business. “The acquisition of Pergo fits with this strategy,” it stated, “by enhancing Pfleiderer’s position in the North American laminate flooring market and…combining forces with Pergo allows Pfleiderer to drive the consolidation of the North American market and provides the platform for further expansion through organic growth.”

Overdiek noted the company will probably make more acquisitions this year, though most likely in Eastern Europe as it still has approximately $258.8 million on hand after the purchase of Pergo.