Steinhoff International’s creditors will be feeling that bit more secure after the troubled company yesterday said it had sold its subsidiary, Mattress Firm, to Tempur Sealy International, for $4 billion (R74 billion).
Mattress Firm is a speciality bed retailer in the US, with more than 2 300 retail stores nationwide.
Tempur Sealy and Mattress Firm's combined global footprint will include about 3 000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities, and four state-of-the-art R&D facilities worldwide.
In 2017 Steinhoff made headlines for accounting fraud in what was said to be South Africa’s biggest corporate fraud, with its executives facing criminal charges.
The company, which is technically insolvent with a R1 billion market value, has subsequently been forced to sell off assets to settle billions in rand of claims.
The troubled retailer’s shares at 5pm were down 8% at R0.25.
On January 11, 2023 Steinhoff announced that Mattress Firm had elected to withdraw its initial public offering registration, and would continue to actively explore all options and the way forward.
Steinhoff, through Newco 3 and via Newco 9, holds an equity interest of 50.1% (economic interest of approximately 45% on a fully-diluted basis) in Mattress Firm.
Mattress Firm and Tempur Sealy International announced that they had signed a definitive agreement for Tempur Sealy to acquire the entire issued shares in Mattress Firm in a cash and share transaction valued at $4bn.
The consideration would consist of $2.7bn of a cash consideration, subject to adjustments including the repayment of Mattress Firm’s debt, and 34.2 million shares in Tempur Sealy valued at $1.3bn based on the closing share price of Tempur Sealy on May 8, 2023.
Following the deal, Steinhoff said it would indirectly own approximately 7.5% of the combined company.
Tempur Sealy said it expected to expand its existing board of directors by appointing two mutually-agreed existing Mattress Firm directors to the Tempur Sealy board upon the closing of the transaction.
Mattress Firm CEO John Eck said: "Under Tempur Sealy's leadership, our combined company will be in a unique position to take advantage of our shared values and complementary capabilities to better address consumers’ needs and drive growth."
Steinhoff said the transaction had been approved by the boards of both companies, The deal was expected to close in the second half of 2024, subject to applicable regulatory approvals, including the US Hart-Scott-Rodino Antitrust Improvements Act of 1976.
“On receipt of the cash consideration on closing, the cash will be used to prepay Newco 3 debt on the terms of the existing and amended finance documents ... Proceeds from the sale of those shares will also be used to prepay financial indebtedness,” Steinhoff said.
Steinhoff is currently trying to get its shareholders to agree to a restructuring deal and addressing its financial indebtedness. Without their backing the firm could go bankrupt.
In a statement on April 25, Steinhoff said it had decided to include contingent value rights (CVRs) under its drafted WHOA Restructuring Scheme after meeting with shareholder resistance to the original plan.
And on Monday, Steinhoff told the markets that its Stichting Steinhoff Recovery Foundation (SRF), an independent body set up to assess claims under the Global Settlement, had indicated it would commence with the distribution of cash recoveries to valid individual and institutional market purchase claimants today (May 10).
The SRF previously informed Steinhoff that it had received in excess of 43 000 claims representing about €3.2bn (R65bn) in value.
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