Carpet maker Bremworth has struck a deal to sell its business to the world’s largest flooring manufacturer and owner of rival Godfrey Hirst.
The listed company yesterday told the NZX it had entered an agreement with Mohawk Industries.
Mohawk proposes via its subsidiary, Floorscape Limited, to buy 100% of its shares.
This would deliver Bremworth shareholders an estimated range of $1.05 to $1.15 per share — a premium of up to 85% on the closing price before the announcement of the share takeover bid.
A cash payment from Floorscape of 75c per share is included and a share buyback and fully imputed dividend, estimated to be 30c-40c per share. The sale is conditional on shareholder and other approvals.
Bremworth chairman Rob Hewett said it was a favourable outcome for shareholders and created long-term strategic benefits for New Zealand manufacturing, wool growers and regional communities.
New ownership under a business with significant revenues and operations in more than 170 countries would represent a significant vote of confidence in New Zealand manufacturing.
Bremworth carpets would gain greater export reach and NZ’s natural fibre story would be showcased on the world stage.
It would be better placed to compete in Australasia against imported carpets, and increase business in North American and European markets.
“In this way, a sale to Mohawk should strengthen demand for New Zealand strong wool, supporting farmgate returns and regional economies.
“With Bremworth on a more sure financial footing, this should also accelerate our innovation pipeline in both wool-based and synthetic flooring solutions.”
Bremworth expects to distribute between $21 million and $28m via the capital distribution, based on estimated cashflows between the share takeover announcement and its expected completion in the first half of next year.
This would provide shareholders between 30c-40c per share.
The share buyout follows Bremworth announcing last May it would go back to manufacturing synthetic carpets and the exit of former chief executive Greg Smith after a board reshuffle in March.
