Bremworth carpet wool.
Photo: Bremworth
- Carpet maker Bremworth earnings hit by tough trading
- Company under takeover offer from owner of main rival Godfrey Hirst
- Cash return to shareholders likely to be less than first estimated
- Commerce Commission has concerns over proposed takeover
Shareholders in carpet company Bremworth have been told they will likely get less cash in the hand if a proposed takeover by the owner of their main competitor goes ahead.
The company has been made an offer by the world’s biggest flooring company US-based Mohawk Industries, which also owns competing brands Godfrey Hirst and Feltex.
It has offered 75 cents a Bremworth share, with the offer to be topped up by a distribution of excess Bremworth capital, which was estimated at the time between 30 and 40 cents a share, taking the total takeover price to between $1.05 and $1.15 cents a share, valuing Bremworth at between $70 million and $77m.
In an update on the proposal, the company said its earnings were struggling and it may not have as much spare cash as originally thought to pay to shareholders if the takeover goes ahead.
“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.”
It said the capital return to shareholders now looked to be 20-30 cents a share, reducing the total takeover price to 95c-$1.05.
“Bremworth emphasises that this estimate is based on assumptions of market conditions, business performance and the timing of implementation. It therefore remains subject to change,” the statement said.
The takeover, which is backed by the Bremworth board, is being considered by the Commerce Commission which has issued a list of concerns including the prospect it would substantially lessen competition, impact prices, and that it might reduce choice for consumers.
The commission has extended its decision deadline to mid-March, but Bremworth said that might be pushed out again to mid-to-late May.
Bremworth said if the takeover does not proceed it was likely its finances would worsen.
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