Feltex treads softly on carpet buy-up

By FIONA ROTHERHAM

Industry players say Feltex Carpet's reported $175 million purchase of the Australasian assets of the world's biggest carpet maker, Shaw Industries, is a precursor to an Australian float of the merged operations.

Neither Feltex chief executive Chris Davis nor Shaw would comment on the reported deal yesterday.

The US-owned Shaw company is one of Australia's largest carpet manufacturers, holding around a third of the market.

It is only a bit player on the New Zealand scene, distributing four brands with a 3 or 4 per cent market share.

Feltex, Godfrey Hirst and Cavalier Carpets are the big players in this country, each accounting for about 30 per cent of sales.

Shaw is said to have offered its Australian and New Zealand operations to other carpet manufacturers who - although interested - were unwilling to pay the price Feltex agreed to.

The deal will give Feltex a play in all markets as it produces different carpet types from the larger company, which operates on a high-turnover, lowmargin basis.

Industry sources said Feltex's majority owner, the investment bank CS First Boston, had been looking for an exit strategy from the company for some time. However, it was too small and unglamorous a stock to float on the subdued local sharemarket.

Merging with Shaw's Australian operations would make it the biggest Australasian player and accordingly more attractive for an Australian float further down the line.

Feltex Carpets was once part of the giant Feltex group - one of the top 10 companies in New Zealand in the 1970s and 1980s.

In 1997 it was the subject of a management buyout.

Mr Davis and the marketing general manager, Allan Steedman, bought it in partnership with CS First Boston from British-based BTR Nylex for an undisclosed sum.

CS First Boston is thought to hold 85 per cent.

Feltex said last year that it expected to boost exports by $10 million after concluding restructuring talks with its Christchurch employees.

The workers agreed to work round-the-clock shift work seven days a week.

As a result the company invested $3 million in an equipment upgrade to increase production.

North Island plants already ran 24 hours a day but a strong union presence slowed changes in Christchurch.