Restaurant Brands' majority shareholder Finaccess Restauracion wants to take full control. Photo / Alex Burton
Mohawk’s play for carpet maker Bremworth follows a string of big corporate moves in recent months, begging the question: who is next?
New York Stock Exchange-listed Mohawk, with a market capitalisation of US$8.1 billion ($13.98b), has entered into a scheme to buy Bremworth – a company that has struggled in recent years.
On Tuesday, Bremworth – formerly Cavalier – said it was unable to comply with the NZX listing rule which required it to release 2025 annual report and audited financial statements by the end of that day.
Under the Mohawk deal, shareholders could receive between $1.05 and $1.15 per share, valuing Bremworth at $74 million to $81m.
The US company is involved in the production of carpet, rugs, ceramic tile, laminate, wood, stone and vinyl flooring.
It has several brands, among them being the locally recognised Feltex and Godfrey Hirst.
In the past two decades, Mohawk said it had transformed the business from an American carpet maker into the world’s largest flooring company with operations in North America, Europe, South America, Oceania and Asia.
If successful, the tilt at Bremworth will follow a number of big corporate plays in recent months.
First among them was the $4.22b offer from France’s Lactalis – the world’s biggest dairy company – for Fonterra’s consumer and related businesses.
The deal will go to a shareholder vote on October 30. If all goes to plan, the sale will go through in the first half of next year.
Then came the news this week that America’s Abbott, a corporate behemoth with a market cap of US$232b, had offered $307m for Synlait Milk’s loss-making but state-of-the-art plant at Pōkeno.
Next was Mexico’s Finaccess Restauracion plan for 25% of Restaurant Brands that it did not already own at $5.05 a share, or about $157.5m.
Harbour Asset Management portfolio manager Shane Solly said corporates are looking at assets that may have been undervalued by the listed market, or have possibly taken a view that the economy is on the verge of a recovery.
“This latest sort of evolution of smaller businesses that are sensitive to activity is an interesting reminder that there are signs that the economy is recovering and that some of these stocks have been left behind,” Solly said.
“At the big end of town, we have certainly seen a recovery in Fletcher Building’s share price, for example,” he said.
“It’s nothing to do with M&A [merger and acquisition]– but it’s a sign that people are thinking the economy is getting its act together.
“There is potential to continue to see some of the ‘forgotten’ stocks being picked up by industry participants.”
With interest rates falling, a soft New Zealand dollar is making local assets more attractive.
“The cost of borrowing has become more useful, and our weaker currency is also helpful if you’re coming from overseas,” Solly said.
He said there were five to 10 businesses that were in a similar situation to Bremworth.
A recent report from law firm Simpson Grierson suggested New Zealand’s M&A market was poised for a solid recovery after several subdued years.
The flow of takeovers has not all been one way.
Leading diversified agri company Scales will pay $103.6m to go to full control of two of its Australian joint ventures and to majority ownership of a third, which it said would lift earnings in its current financial year.
Scales’ move was well supported in the market.
Ryman Healthcare listed on the ASX this week with some fanfare, but do dual listings really make a difference?
Matt Peek, Fisher Funds’ portfolio manager for New Zealand equities, sees dual listings as no more than a distraction.
“We all know that improved company performance is what’s most important to drive returns for investors in the long run,” Peek said.
“We’ve seen a negligible impact from the ASX dual-listings of companies like Freightways and Briscoe Group, with the vast majority of share trading remaining on the NZX.
“There may be some additional passive buying of shares if Ryman qualifies for some of the Australian indices.”
Peek said Ryman had previously had plenty of interest from Australian investors, raised billions in equity when needed and is fairly liquid on the NZX, so it wasn’t obvious that there were benefits in this regard.
“Companies like Mainfreight and Port of Tauranga have certainly proven you don’t need an ASX listing to be successful,” Peek said.
Brokers Forsyth Barr say Synlait’s planned sale of its Pōkeno plant overshadowed its annual result.
“Synlait Milk 2025 result was the sideshow to the sale of its North Island assets to Abbott for NZ$307m,” analysts Matt Montgomerie and Ben Crozier said in a report.
“We see this as a clear positive for two reasons: (1) removal of balance sheet risk; and (2) removal of material losses.”
Synlait is a2 Milk’s sole supplier of formula and is Synlait’s biggest customer.
Post-sale, Synlait will be left with a solidly profitable Dairyworks and single-site/customer risk at Dunsandel, in Canterbury, while a2 Milk will soon be making its own formula at its newly-acquired facility, also at Pōkeno.
Montgomerie and Crozier said Synlait would need to “pedal hard” over the next 36 months to diversify its customer base and improve utilisation as it prepares for a sharp reduction in volumes from a2 Milk.
As the once-troubled Synlait heads towards being debt free, they were “glad this journey is over”, they said.
Investment house Jarden, and many others in financial markets, breathed a sigh of relief that the Government’s review of the power sector did not involve major structural changes.
The review opened up the possibility of liquefied natural gas (LNG) imports and Government participation in potential capital raisings from the big three state-owned generators that were partially privatised under the mixed ownership model (MOM) in 2013/14.
“It attempts to address immediate credibility gaps on fuel security and Crown capital support, while signalling a tougher regulatory stance,” Jarden said.
“Liquefied natural gas procurement and MOM equity backing are the near-term focus but the durability of the regulatory framework for firming capacity should determine whether the dry-year premium can be structurally reduced,” the firm said.
“This is all a relief and positive for the sector.”
Forsyth Barr in its analysis said the outcome of the long-awaited Frontier report and Cabinet review is a package of proposals that tweaks New Zealand’s energy system but falls well short of structural reform.
“Overall, the package is positive for the sector, reducing short-term regulatory risk and supporting generation developments,” Forsyth Barr said.
“The risk of short-term structural change has gone, but political risk remains as the focus now shifts to the 2026 election and yet-to-be-announced energy policies of the various political parties,” it said.
“With the review outcomes better than expected, our sector valuations and ratings are unchanged.”
Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.