Shareholders of Bremworth have been advised they are likely to receive less cash than initially expected if a proposed takeover by Mohawk Industries proceeds.
The U.S.-based flooring giant — the world’s largest in its sector — owns competing brands including Godfrey Hirst and Feltex, making the transaction highly significant for the regional carpet market.
Revised Takeover Valuation
Mohawk Industries has offered 75 cents per Bremworth share, to be supplemented by a distribution of excess capital. Initially, that capital return was estimated at 30–40 cents per share, bringing the total takeover valuation to between $1.05 and $1.15 per share, valuing Bremworth at approximately $70 million to $77 million.
However, in a recent market update, Bremworth confirmed that weaker-than-expected trading conditions have impacted earnings and reduced its available cash reserves.
“The trading conditions that Bremworth has faced have been more difficult than anticipated. This has impacted Bremworth’s earnings and resulted in a deterioration of Bremworth’s cash position,” the company stated.
As a result, the capital return is now expected to range between 20 and 30 cents per share, lowering the total effective offer price to 95 cents to $1.05 per share.
Bremworth cautioned that the revised estimate remains subject to change, depending on market conditions, business performance, and the timing of implementation.
Also Read: Mohawk Industries Moves to Acquire New Zealand’s Bremworth Carpet Company
Regulatory Scrutiny Intensifies
The takeover, which is supported by Bremworth’s board, is currently under review by the Commerce Commission. The regulator has raised concerns that the acquisition could substantially lessen competition in the carpet market, potentially impacting pricing and consumer choice.
The Commerce Commission has extended its decision deadline to mid-March, with indications that the timeline could be further pushed to mid-to-late May.
Financial Pressure if Deal Fails
Bremworth also warned that if the takeover does not proceed, the company’s financial position may continue to deteriorate amid challenging trading conditions.
The development places shareholders in a delicate position: while the takeover offers an exit opportunity, the final cash return may be lower than originally projected, and regulatory approval remains uncertain.
As consolidation continues across the global flooring industry, the outcome of this proposed acquisition is expected to have broader implications for market competition and pricing dynamics in the region.
