Bremworth takeover cleared, but deadline risk remains

The Commerce Commission has granted clearance for Mohawk Industries to acquire all of the shares in NZX-listed Bremworth.

The acquisition will be carried out through Mohawk's New Zealand subsidiary, Godfrey Hirst, under the scheme of arrangement announced last year.

The approval was delayed while the commission considered whether combining Godfrey Hirst and Bremworth would substantially lessen competition in the New Zealand soft flooring market, particularly for woollen carpet.

In its decision, the commission noted the companies had competed primarily in wool carpet since Bremworth stopped making synthetic carpet in 2020.

Bremworth only re-entered the synthetic carpet market on a limited basis last year.

However, the commission said wool carpet no longer dominates the market, with synthetic carpet now accounting for the majority of carpet sold in New Zealand, providing consumers with alternatives to wool.

Much of that synthetic carpet is imported by competitors, providing an alternative for retailers and consumers.

Commission convenor Dr Derek Johnston said that while the acquisition would remove direct competition between the two largest suppliers of wool carpet, competition from suppliers of synthetic and imported carpet would continue to constrain the combined business.

"After assessing all of the information before it, the commission considers that the loss of competition as a result of the proposed acquisition is unlikely to constitute a substantial lessening of competition in the wider soft flooring market," he said.

In a separate announcement to the NZX, Bremworth said it was continuing discussions over extending the scheme implementation agreement after delays in obtaining regulatory approval.

The company said that if an extension is not agreed, and the scheme is not implemented before 7 August, either party could terminate the agreement and the takeover would lapse.