Sleepy’s parent company to be bought by African retailer

There are now 37,214,000 shares in issue with a current share value of 29.74 giving Mattress Firm Holding a market capitalisation of 1.11B Dollars.

South Africa’s Steinhoff International Holdings NV will purchase Houston-based Mattress Firm Holding Corp. for $2.4 billion, its first entry into the USA market.

The deal will see Steinhoff pay $2.4 billion for Houston, TX-based Mattress Firm’s equity and a further $1.4 billion for its debt, much of it the result of the target’s own acquisition spree.

Steinhoff to purchase the business, that includes 3,500 stores, is paying over double the last price at closing of Mattress Firm stock, a valuation that might cause some eyebrows to raise, says a BNP Paribas analysts.

“It is also the only U.S. mattress manufacturer with a nationwide supply chain and it will expand Steinhoff’s footprint in a relatively defensive product category that is growing at around 5% per year”, RBC added.

A call to Mattress Firm was not immediatley returned.

Founded in 1986, the Houston-based company is the largest bedding retailer in the United States with 2015 sales of over $3.5 billion. The companies are now expecting to deal to be completed sometime during the third quarter of 2016.

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Steinhoff would pay 60% more than what Mattress Firm should be trading at based on its most likely earnings growth trajectory, according to Thomson Reuters StarMine. “One of Mattress Firm’s marketing strategies is “Replace Every 8, ‘ telling customers they should replace their mattresses every eight years”. In 1997 it acquired a stake in a South African furniture company and got listed on the Johannesburg Stock Exchange the following year.

Markus Jooste, CEO of Steinhoff, said, “The boards of Steinhoff and its management team are enthusiastic about the opportunities this transaction creates”.

Steinhoff officials said they recognize the strength of Mattress Firm’s experienced and entrepreneurial management team and its proven track record of delivering growth, profitability and leadership in the USA retail mattress market.