Feltex Rejects Initial Proposal from Godfrey Hirst
Wellington, New Zealand, October 18, 2005--Troubled carpet maker Feltex has rejected an initial merger proposal from its Australian rival Godfrey Hirst, according to Stuff.co.nz.
The pair have been in talks for several months, culminating in a face-to-face meeting in Melbourne yesterday. Godfrey Hirst secured a 5.83 percent stake in Feltex in June and said it wanted to talk about merging.
Today, it became clear that those initial discussions had floundered, with Feltex chairman Tim Saunders announcing the firm "could not support (Godfrey Hirst's) proposal in its current form."
Mr Saunders said the Feltex board was acting on the recommendations of financial advisors Cameron & Co in rejecting the deal.
The exact details of the proposal remain confidential, although NZPA understands it involved a full merger.
"It looks like anything to do with a full merger is not on the table," an industry source said.
"They've decided not to do that."
A partial merger now appears to be the favored option.
Mr Saunders said Feltex "remained open to receiving alternative proposals to effect a combination of the businesses."
"Feltex will continue with its internal operational review to identify cost savings and efficiencies in its operations, in parallel with the discussions with Godfrey Hirst," Mr Saunders said.
Godfrey Hirst wasn't immediately available for comment tonight.
Feltex will be hoping Godfrey Hirst doesn't walk away from the deal completely.
Godfrey Hirst finance director Jim Walsh's patience is thought to be fraying as Feltex moves ahead independently with a substantial restructuring.
Market speculation had centred around a reverse takeover of Feltex by the privately-held Godfrey Hirst. It would have become Feltex's main shareholder with a stake of more than 50 percent, with the balance of shares remaining listed on the local bourse.
