Wellington, New Zealand, July 6--Feltex Carpets Ltd., New Zealand's biggest carpet maker, said it had spoken with Australian rival Godfrey Hirst about a possible tie-up between the two groups but did not indicate whether it would back such a move.
In June, the privately owned Godfrey Hirst, which is Australia's largest carpet maker, built a stake of nearly 6 percent in the troubled Feltex and said it would start talks on a merger although it did not want to make a full takeover.
"We are committed to considering whether any merger proposal with Godfrey Hirst will create shareholder value for Feltex shareholders when compared against alternatives," said Feltex chairman Tim Saunders in a statement on Wednesday.
Saunders said the talks had been "constructive" and the issue would be considered by the Feltex board later this month.
Feltex shares, which listed at NZ$1.62 in June 2004, ended down 1.7 percent at NZ$0.59, giving it a market value of NZ$88 million ($60 million).
On June 20, Feltex cut its annual profit forecast by up to 25 percent, its second downgrade in three months, sparking a 30 percent slide in its shares to record lows.
The group has blamed slower demand due to a weaker Australian housing market and competition from imported synthetic carpets for the downgrades.
