File pic Photo: 123RF
- Mohawk Industries offers to buy Bremworth
- Shareholders would receive between $1.05 and $1.15 cents a share
- Buyout will need New Zealand and Australian regulator approval.
Carpet market Bremworth has agreed to be bought by the world's biggest flooring company, in a move that would concentrate local manufacturing under one owner.
Bremworth has agreed a takeover with US-based Mohawk Industries, through its local subsidiary Floorscape, which already owns leading local brands Godfrey Hirst and Feltex.
It follows the launch of a strategic review in February, and the ousting of directors and chief executive in a boardroom coup this year.
Bremworth chairperson Rob Hewett said the agreement was the best outcome for shareholders after it looked at several potential buyers.
"It is a positive outcome for shareholders who have stood by the company through some very challenging years. The offer provides certainty of value at a meaningful premium."
Floorscape is offering between $1.05 and $1.15 cents a share, which values Bremworth at between $70 million and $77m.
The deal is an agreed scheme of arrangement, offering a lower level of shareholder approval, but needing an independent valuation and various regulatory approvals.
Bremworth's board has unanimously recommended the offer, which it says is an 85-percent premium to its last closing price.
Shareholders are being offered a cash payment of 75 cents a share, with an added distribution of excess cash on Bremworth's balance sheet of between 30 and 40 cents.
Hewett said Mohawk's capital and scale will allow Bremworth to better compete with imported carpets in the New Zealand and Australian markets, and open up international opportunities.
"In this way, a sale to Mohawk should strengthen demand for New Zealand strong wool, supporting farmgate returns and regional economies."
The deal will likely be closely looked at by the Commerce Commission for its effects on competition, because Mohawk already owns rival carpet manufacturers Godfrey Hirst and Feltex Carpets. Australia's regulator will also scrutinise the deal.
The companies are aiming to settle the takeover in the first half of next year.
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