The expansion improved sales, as the companies merged under the Mattress Firm name, but resulted in rising costs.
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Mattress Firm took a $2.4 billion offer from Steinhoff International Holdings, with Mattress Firm store brands, including Sleepy’s and Sleep Train.
A company relatively unknown outside its home base has entered the USA retail market in a deal to acquire Mattress Firm Holding Corp., the largest mattress retailer in the United States.
Steinhoff, headquartered near Cape Town, offered about $2.4 billion, or $64 per share, for Mattress Firm, owners of the Sleepy’s chain of mattress retailers.
Steinhoff will also assume Mattress Firm’s debt, bringing the total value of the deal to about $3.8 billion, the companies said.
By targeting Mattress Firm, Steinhoff is gaining the only USA mattress manufacturer with a nationwide supply chain.
The Mattress Firm Holding deal would give Steinhoff access to the growing USA market, and help diversify its operations and guard against possible repercussions following Britain’s June vote to leave the European Union.
The Mattress Firm deal gives the South African holding firm access to the US market, and it is paying a high premium for the privilege at $64 share. The Firm is a specialty retailer of mattresses and related products and accessories in the United States.
Mattress Firm has struggled, posting an outright loss in the first quarter. Stagner will also become a member of Steinhoff’s executive committee.
“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 CEO, said in the written statement. He added, “This transaction will allow Steinhoff to not only enter the USA 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”.
Steinhoff, which counts South African retail veteran Christo Wiese as board member and shareholder, would pay 60 percent more than what Mattress Firm should be trading at based on its most likely earnings growth trajectory, according to Thomson Reuters StarMine.
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Mattress Firm Holding Corp.is a holding company. Linklaters LLP acted as legal counsel to Steinhoff in connection with the transaction.
