Wellington, New Zealand, October 27, 2005--Shares in Feltex fell 6.5% in early trading today on news its planned merger with Australia-based carpet maker Godfrey Hirst has been called off, according to the New Zealand Herald.
The decision was confirmed last night, following a meeting between the two companies in Melbourne on Monday.
The shares have been a disappointment for investors, having plummeted from an issue price of $1.70 in June last year to a low of 39c a year later following a string of profit downgrades.
Godfrey Hirst secured a 5.83% stake in June this year and started to talk about merging.
But it is understood the offer that was brought to the table was seen more as a takeover than a merger.
Feltex chairman Tim Saunders yesterday said the firm "could not support (Godfrey Hirst's) proposal in its current form", but was open to alternative proposals to combine the business.
Mr Saunders said the Feltex board was acting on the recommendations of financial advisors Cameron & Co in rejecting the deal.
Mr Saunders said Feltex would continue with its ongoing operational review that has already resulted in the closure of a yarn plant in Melbourne and the loss of 235 jobs.
Godfrey Hirst finance director Jim Walsh told the New Zealand Herald yesterday he was disappointed an agreement could not be reached, and believed the proposal it had put had been an "attractive one for Feltex shareholders".
However, he said the two rivals had agreed to explore other opportunities to share resources or merge parts of businesses that held benefits for both companies.
