Steinhoff (JSE: SNH) and Mattress Firm (NASDAQ: MFRM) announced that they have entered into a definitive merger agreement under which Steinhoff will, subject to the successful consummation of a cash tender offer, acquire Mattress Firm for $64.00 per share in cash. This represents a total equity value of approximately $2.4 billion and an enterprise value for Mattress Firm of approximately $3.8 billion including net debt.
The investment in Mattress Firm will create the world’s largest multi-brand mattress retail distribution network and facilitate Steinhoff’s entry into the U.S. Similar to the European retail mattress market, where Steinhoff is a leader, the North American mattress industry has demonstrated long term stability and consistent growth. Mattress Firm represents an attractive investment proposition to Steinhoff through its national footprint and leadership in the U.S. mattress retail market.
The acquisition price is a premium of 115% to Mattress Firm’s closing price of $29.74 per share at the close of trading on August 5, 2016. 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 recognises the strength of Mattress Firm’s experienced and entrepreneurial management team and its proven track record of delivering growth, profitability and leadership in the U.S. retail mattress market. We look forward to welcoming Mattress Firm employees to be part of the one of the world’s leading multi-format retailers.”
Steve Stagner, Mattress Firm Executive Chairman said: “The Mattress Firm board believes that the transaction provides significant value to our stockholders through the premium to our share price and the immediate liquidity at closing, while giving Mattress Firm an ideal partner with a proven track record in the complete mattress supply chain including the retail and manufacture of mattresses. This expertise will complement our diverse selection of products provided by our valuable partners. Steinhoff’s management team shares our vision for the growth and expansion of Mattress Firm and, as such, we believe they are the right long-term partner for our customers, employees, suppliers and other stakeholders.”
Transaction Details
Under the terms of the merger agreement, an indirect, wholly owned subsidiary of Steinhoff will commence a cash tender offer to purchase up to all of the outstanding shares of Mattress Firm common stock for $64.00 per share in cash. The closing of the tender offer is subject to customary closing conditions, including regulatory clearances and a majority tender condition, following which all remaining stockholders of Mattress Firm will be cashed out, with a right to receive the offer price in a merger that will take place as soon as practicable thereafter. The transaction is expected to close by or around the end of the third calendar quarter.
Steinhoff intends to finance the acquisition through a combination of bank and bridge loans. The closing of the transaction is not subject to any financing condition.
About Mattress Firm
With more than 3,500 company-operated and franchised stores across 48 states, Mattress Firm (NASDAQ: MFRM) has the largest geographic footprint in the United States among multi-brand mattress retailers. Founded in 1986, Houston-based MFRM is the nation's leading bedding retailer with over $3.5 billion in pro forma sales in 2015. MFRM, through its brands including Mattress Firm, Sleepy’s and Sleep Train, offers a broad selection of mattresses, bedding accessories and other related products from leading manufacturers, including Serta, Simmons, Tempur-Pedic, Sealy, Stearns & Foster, King Coil and Hampton & Rhodes.
