Steinhoff to acquire mattress maker

Published Aug 8, 2016

Share

Chicago - Steinhoff International Holdings agreed to buy Mattress Firm Holding for about $2.4 billion, a deal that vaults the South African discount retailer into the US market while creating the world’s largest bedding giant.

Read also: Steinhoff secures European foothold

Steinhoff offered $64 a share in cash, more than double Friday’s $29.74 closing price for Houston-based Mattress Firm. The acquisition of the largest US specialty mattress retailer included net debt that raised the deal’s enterprise value to about $3.8 billion, the companies said Sunday in a statement. Directors at both companies have approved the takeover, which is expected to be completed by the end of the third quarter.

The purchase would give Steinhoff a global reach while diversifying sales away from South Africa, its largest market, where the furniture and discount apparel seller is subject to currency swings with the volatile Rand. Steinhoff said it intends to finance the deal for Mattress Firm through a combination of bank and bridge loans.

Shares of Mattress Firm had declined 52 percent in the past year as slumping demand for retail products and discounting weighed on its results. The company had a market capitalisation of about $1.11 billion.

“This transaction will allow Steinhoff to not only enter the US market with an industry leading partner and a national supply chain, but it will also expand Steinhoff’s global market reach in the core product category of mattresses,” Markus Jooste, Steinhoff’s chief executive officer, said in the statement.

Mattress Firm announced November 30 that it had agreed to buy rival Sleepy’s for $780 million, combining the two largest mattress sellers in the US into a network of 3 500 stores and 80 distribution centres across 48 states. The deal was completed in February.

The company shuffled chief executives in March as it lowered a sales forecast for the year. Ken Murphy was promoted to the CEO post, replacing Steve Stagner, who remained as Mattress Firm’s chairman.

Steinhoff, which has 2 300 stores, last month announced a deal to buy 900-store UK discount chain Poundland Group for 597 million pounds ($794 million).

 

* With assistance from David M. Levitt

BLOOMBERG

Related Topics: