Mohawk Industries to Acquire Bremworth in Major Deal

Bremworth, a New Zealand-based carpet maker, has confirmed its acquisition by the US flooring giant Mohawk Industries. The agreement, announced on Tuesday, involves Mohawk’s New Zealand subsidiary, Floorscape, and is expected to provide significant financial benefits to Bremworth’s shareholders.

Under the terms of the deal, shareholders are slated to receive between $1.05 and $1.15 per share. This consists of a cash payment of $0.75 from Floorscape and an additional $0.30 to $0.40 per share from Bremworth’s own cash reserves. The company anticipates returning between $21 million and $28 million to its shareholders before the scheme’s implementation, which is expected to occur in the first half of 2024, subject to regulatory and shareholder approvals.

The proposed acquisition represents a premium of up to 135% compared to Bremworth’s share price prior to its strategic review initiated in February. The company’s shares surged by 47% to $0.91 following the announcement, highlighting investor confidence in the potential benefits of the deal.

Strategic Implications and Leadership Changes

The acquisition follows a period of instability for Bremworth, which has seen a series of leadership changes, including the departure of former Chief Executive Officer Greg Smith. Craig Woolford now serves as interim chief executive. The company’s strategic review, originally started by the previous board under George Adams, has continued under the current chair, Rob Hewett.

Woolford emphasized that the acquisition would enhance Bremworth’s retail presence in both Australia and New Zealand. He remarked, “This is about creating certainty and new opportunities for everyone connected with Bremworth.” Hewett added that the board had engaged with multiple potential buyers before unanimously recommending Mohawk’s offer, which he described as providing “certainty of value at a meaningful premium.”

The deal is poised to leverage Mohawk’s resources, allowing Bremworth to compete more effectively in markets across Australia, Europe, and North America. With improved financial stability, the company aims to accelerate its innovation pipeline, particularly in wool-based and synthetic flooring solutions.

Financial Overview and Future Prospects

Bremworth’s recent financial performance has raised concerns, with a reported loss of $8 million for the six months ending December, a decline of 386% from the previous period. Despite an 8% increase in revenue to $42 million, the company faced challenges that contributed to its decision to explore acquisition options.

The full-year financial results, initially expected last month, have not yet been released. Bremworth announced that these results were not ready and risked trading suspension if not posted by October 7, 2023. Shareholders will participate in a vote on the acquisition once the necessary regulatory clearances and tax rulings are obtained. An independent adviser’s report will be made available ahead of this vote.

In summary, the acquisition by Mohawk Industries marks a pivotal moment for Bremworth, promising increased financial backing and strategic growth opportunities. The coming months will be crucial as the company navigates regulatory approvals and finalizes its transition into a new phase under Mohawk’s ownership.