BY Richard Summerfield
South African retailer Steinhoff International Holdings has taken its first tentative steps into the US market following the announcement that it will acquire Mattress Firm Holding Corp in a deal worth $3.8bn including debt.
Steinhoff has agreed to pay Mattress Firm shareholders $64.00 per share in cash for a total equity value of approximately $2.4bn, The company’s existing debt will see Steinhoff pay an enterprise value for Mattress Firm of approximately $3.8bn. The acquisition price represents a premium of 115 percent on Mattress Firm’s closing price of $29.74 per share at the close of trading on 5 August.
The deal is expected to close in the third quarter of 2016, the companies said. The transaction has been unanimously approved by the board of directors of Mattress Firm and the management and supervisory boards of Steinhoff.
Markus Jooste, CEO of Steinhoff said: “The boards of Steinhoff and its management team are enthusiastic about the opportunities this transaction creates. This transaction will allow Steinhoff to not only enter the U.S. 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. The Mattress Firm brand and speciality retail concept are a strong complement to the Steinhoff group retail brand portfolio in the many geographies where the group operates.”
Steinhoff’s move for Mattress Firm is the latest in a series of deals completed by the company (in July, it agreed to pay nearly $800m for British discount chain Poundland), and will give the firm a footing in the US, with Steinhoff controlling around 25 percent of the country’s retail market for specialty mattresses. The company is already the world’s largest bed retailer. In Europe, Steinhoff already owns European home furnishings retailers Bensons for Beds and Conforama, a significant US operation of franchised and operated stores in 48 states. Mattress Firm has over 3500 retail outlets across the US as well as 75 distribution centres. The company generated $3.5bn in pro-forma sales last year.
In February, Mattress Firm reinforced its position as a leader in the US mattress retail market by completing a $780m merger with HMK Mattress Holdings LLC, the holding company of Sleepy's. Sleepy's was the second largest specialty mattress retailer in the US with over 1050 stores.