Chicago - Steinhoff International Holdings agreed to buy Mattress Firm Holding for about $2.4bn (R32.88bn), a deal that vaults the South African discount retailer into the US market while creating the world’s largest bedding giant.
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 $3.8bn, 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% in the past year as slumping demand for retail products and discounting weighed on its results. The company had a market capitalisation of about $1.11bn.
Deal will expand Steinhoff’s global market reach
“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 on November 30 that it had agreed to buy rival Sleepy’s for $780m, combining the two largest mattress sellers in the US into a network of 3 500 stores and 80 distribution centers 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 chairperson.
Steinhoff, which has 2 300 stores, last month announced a deal to buy 900-store UK discount chain Poundland Group for £597m (R10.7bn).
FULL STORY: Steinhoff agrees to buy UK discount store Poundland for R11.4bn
"Buying Poundland marks Steinhoff’s first success in European dealmaking this year, after failing to acquire French retailer Darty and Argos owner Home Retail Group, the Financial Times reported.
Wiese said to have bought 50% of SA firm
Steinhoff's largest shareholder is South Africa billionaire Christo Wiese, who was in the news on Monday for another potential deal in South Africa.
"Wiese has formed a consortium with Regarding Capital Management (RECM) to take control of 75% of Trans Hex, an alluvial diamond miner that suspended trade in its shares on Friday without giving details of why it had done so," reported Business Day on Monday.
FULL STORY: Consortium to make offer for Trans Hex’s shares
"Someone who attended the Trans Hex annual general meeting on Friday but declined to be named said Wiese had told those present about his intentions, which would result in a change of control of Trans Hex and trigger an offer to minorities."
Wiese is said to have bought 50% of the company and would have to pay another R100m to take the company fully private.
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