Global flooring manufacturer Mohawk Industries has agreed to buy Australasian carpetmaker Godfrey Hirst, known domestically for acquiring failed rival Feltex more than a decade ago.
No price was disclosed in the transaction, which is expected to be completed in the first half of next year, although the Australian Financial Review reported the deal was said to be worth A$500 million.
Godfrey Hirst's New Zealand division more than doubled net profit to $11 million in the year ended June 30, 2016 on a 13 per cent increase in revenue to $174.6 million with about 41 per cent of sales to related parties, according to accounts filed with the Companies Office.
The Australasian carpet maker's sales were about US$334 million in the year ended June 30, 2017, Mohawk said. Georgia, US-based Mohawk already has manufacturing sites in Australia and New Zealand through its Premium Floors and Floorscape subsidiaries, which distribute the New York Stock Exchange-listed firm's vinyl tile, laminate and wood products in the region.
"Mohawk's strategy in Australia and New Zealand has been to build a leading position in the flooring market," chair and chief executive Jeffrey Lorberbaum said.
"Godfrey Hirst's marketing, manufacturing and distribution strengthen our portfolio."
Geelong-based Godfrey Hirst has been owned by the McKendrick family for the past five decades, and chief executive and chair Kim McKendrick will continue in that role once the sale is completed.
The deal is subject to closing conditions and regulatory approvals at a time New Zealand's Overseas Investment Office is poised for a shake-up under a new administration keen on restricting sales of residential land and strengthen the legislation.
Godfrey Hirst has been an ardent critic of New Zealand's Commerce Commission approving the creation of a wool scouring monopoly on the trade-off that there was a broader public benefit in fending off competition from cheaper foreign rivals.
The firm's most recent and unsuccessful appeal questioned the benefit of foreign shareholders in such a monopoly to the wider public because of the dividend outflows overseas.