Weak carpet sales thin out Bremworth’s expected US sale payout
Tuesday, 10 February 2026
Strong wool is having a cracker time in the market right now, but wool carpet sales are sagging - to the extent that shareholders in New Zealand’s only listed carpet maker are being warned they could make less in the event of the impending sale of the company.
In October, NZX-listed Bremworth, which has had a rocky few years, signed a deal to be acquired by Godfrey Hirst through its vehicle Floorscape Ltd. Godfrey Hirst and Floorscape are ultimately owned by the one of the world’s largest flooring concerns, Mohawk Inc, which is based in the US state of Georgia.
Godfrey Hirst is currently Bremworth’s main competitor in the New Zealand carpet market, both the $200 million or so wool carpet sector and in synthetics, which is about three or four times bigger.
If it meets various conditions, the deal for Floorscape to acquire Bremworth will see it pay $0.75cps for all shares in the company; shareholders were also initially promised a capital return to them in the likely range of $0.30 to $0.40cps. This valued the company at $70m - $77m.
Read more:
Amazon repackages the old and the unknown into a golden future for NZ
Restructuring overload: The hidden drain on company productivity
But Bremworth has now told shareholders their expected capital return could be considerably less, given market conditions that have been more difficult than first expected.
“This has impacted Bremworth's earnings, and resulted in a deterioration of Bremworth's cash position. As a result, Bremworth now expects to distribute between $14 million and $21 million via the capital return….represent[ing] a payment to shareholders of between $0.20 and $0.30 per share (in addition to the $0.75 cents per share payable by Floorscape).
“Accordingly, the estimated total consideration for the Scheme has been reduced to a range of $0.95 to $1.05 per share.” This could value the company as low as $66m.
Bremworth chairperson Rob Hewett told The Post that while strong wool producers were making more money as the cost of the wool, an input, had gone up, carpet sales were still suffering from sagging consumer demand and the generally depressed marcoeconomic environment, and some of the company’s cash had been “chewed through”.
“We’re making more margin, or lower losses than last year, but we’re not selling the volume we expected to,” he said. “Even though building consents have ticked up, there’s a 9-12 month lag before carpet sales are impacted.”
The chairperson stressed that even if the capital return was lowered, the price being sought for Bremworth remained the same, and the board stood strongly behind the deal on the table from Mohawk. Bremworth has said if the Mohawk deal did not go ahead, its cash position would continue to deteriorate.
Submissions
The Commerce Commission is today closing its submissions on a Statement of Issues it released in December, which considers the likely impact on competition of Bremworth and Floorscape merging.
The tenor of most submissions made to the commission are against the merger, saying when Godfrey Hirst and Bremworth become part of the same family of companies, they will own a market share of as much as 70% (some put it as high as 85%), giving it unprecedented scale across the domestic carpet market.
They argue that if the two companies become one, Godfrey Hirst’s most significant competitive constraint disappears and the company has a near monopoly in the New Zealand wool carpet market and domination of buying, distribution and retail. Given Mohawk’s global domination in flooring, they also argue seeking imports to break the local dominance will also be difficult.
Godfrey Hirst’s argument is that imports constitute a competitive constraint on its operations, and that given the plethora of imports, the local market is too small to sustain two local market manufacturers.