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\nThe regulator feels the takeover of Bremworth Carpets by US based Mohawk Industries would not reduce competition
\nPhoto: 123RF\n<\/p>\n
Takeover would bring Bremworth together with rival Godfrey Hirst
\nRegulator not convinced deal would not “substantially lessen” competition
\nDecision pushed out until mid-March<\/p>\n
The Commerce Commission has competition concerns about a takeover that would bring the country’s two biggest carpet manufacturers a single owner.<\/p>\n
The regulator said it was not convinced at this stage that a takeover of Bremworth Carpets by US-based Mohawk Industries, which owns Godfrey Hirst and Feltex, would not reduce competition.<\/p>\n
“We are currently not satisfied that the proposed acquisition will not have, or would not be likely to have, the effect of substantially lessening competition in one or more relevant markets,” the commission said in a statement .<\/p>\n
Among the commission’s concerns<\/a> were the impact on competition by having the two leading domestic carpet makers and suppliers owned by the same company, the impact on prices, whether there was sufficient competition from other manufacturers or importers, and effect on customers.<\/p>\n The commission had been due to make a decision before Christmas but has now pushed that out to mid-March next year, with the prospect it might be extended further.<\/p>\n Bremworth’s survival<\/p>\n Bremworth’s board agreed in October to a takeover by Mohawk Industries, for between $70 million-$77m, through an agreed scheme of arrangement, which requires a lower level of shareholder approval.<\/p>\n It followed the launch of a [https:\/\/www.rnz.co.nz\/news\/business\/545155\/bremworth-shareholders-force-out-most-of-carpet-maker-s-directors<\/p>\n strategic review in February], and the ousting of directors and chief executive in a boardroom coup this year.<\/p>\n At the time, Bremworth chairman Rob Hewett said the buyout agreement was the best outcome for shareholders after it looked at several potential buyers, and was unanimously backed by the board.<\/p>\n The company has struggled from declining market share as it decided to stop making synthetic carpets in 2020 and sell only wool products, a decision which it backtracked on this year. Its Napier plant was severely damaged by Cyclone Gabrielle in 2023<\/a>.<\/p>\n