Takeover of carpet maker Bremworth dealt a blow by competition watchdog

Wednesday, 24 December 2025

United States flooring giant Mohawk Industries has been dealt a blow in its bid to take over Kiwi carpet maker Bremworth, with the Commerce Commission raising concerns about the deal.

Mohawk, which also owns carpet manufacturer Godfrey Hirst, had argued its proposed takeover of the country’s last listed carpet maker, Bremworth, could be a lifeline for the country’s struggling strong-wool sector.

But the watchdog today said in a statement of issues that it was “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”.

Bremworth shares fell 3.53% to 82c on the news, having shot up nearly 42% on announcing the agreement on October 2 when the carpet and rug maker said it had entered into a scheme implementation agreement with Floorscape Limited, a wholly owned subsidiary of Mohawk Industries, which also owns Bremworth’s main domestic carpet-making rival, Godfrey Hirst. The deal would value Bremworth at between $70 million and $77m.

In its application to the commission Mohawk argued that even after taking over Bremworth, the combined group would continue to face intense competition from imported carpet and hard-flooring products, as well as from large retail buying groups with significant countervailing power.

If approved Mohawk, the world’s largest flooring company, would be New Zealand’s biggest carpet manufacturer with only one domestic rival, Carpet Mill. Imports now comprise almost 50% of the country’s wholesale carpet market.

The statement of issues outlines the commission’s potential concerns with the acquisition following its initial investigation. The statement is not a final decision and does not mean that the commission intends to decline or clear the merger.

The commission said it was seeking submissions from Godfrey Hirst, Bremworth and any other interested parties on the issues raised in the statement.

It would assess the closeness of competition between Godfrey Hirst and Bremworth and how that could change over time and might affect competing domestic manufacturers and carpet importers, as well as the influence of customers and other products such as hard flooring.

The commission said it would further assess whether the deal could lead to Mohawk strengthening its negotiating position with soft or hard flooring retailers, and put up barriers for competitors to supply retailers by limiting their access to retail floor space.

It was also likely that the commission would need to determine the ability for imported carpet to compete and wanted to hear from the industry, the watchdog said.

However, it believed the proposed acquisition was unlikely to substantially lessen competition as a result of market coordination or the manufacture or import and wholesale supply of soft flooring.

The commission also considered it unlikely that Mowhawk buying Bremworth would substantially lessen competition in the wholesale supply of soft flooring products.

“In order to manufacture carpet, both Godfrey Hirst and Bremworth need to acquire the necessary fibres from upstream suppliers and both parties acquire New Zealand grown wool,” the commission said.

“However, we understand that, post acquisition, the merged entity would be in competition with, and constrained by, a variety of domestic and overseas purchasers of the New Zealand wool that can be used to manufacture carpets.

“In order to supply carpet to end-customers, both Godfrey Hirst and Bremworth tend to sell their products through flooring retailers or other third parties. As such, there is no relevant downstream overlap in the supply of carpet.”

Submissions close 5pm, February 2, with cross-submissions due by close of business on February 10. The commission is scheduled to make a decision March 13.