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Sleepy’s owner to be bought by South African retailer

The Carle Place Sleepy's showroom, Dec. 1, 2015.

The Carle Place Sleepy's showroom, Dec. 1, 2015. Mattress Firm, which bought Sleepy's in February, is in turn being acquired by South African retail giant Steinhoff. Credit: Audrey C. Tiernan

Mattress Firm Holding Corp., the owner of Sleepy’s, has agreed to be bought by Africa-based retail giant Steinhoff International Holdings for about $2.4 billion.

Steinhoff offered $64 a share in cash, more than double Friday’s $29.74 closing price for Houston-based Mattress Firm, the largest U.S. specialty mattress retailer. Earlier this year, Mattress Firm purchased Hicksville-based Sleepy’s for $780 million.

Including debt that Steinhoff will assume in acquiring Mattress Firm, the deal’s “enterprise value” is $3.8 billion, the companies said Sunday in a statement. The transaction is expected to close by the end of the third quarter.

Steinhoff said the deal, which vaults the South African discount retailer into the U.S. market, will make it the world’s largest bedding giant. Steinhoff, which has 2,300 stores, last month announced a deal to buy 900-store U.K. discount chain Poundland Group for 597 million pounds ($794 million).

“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,” Markus Jooste, Steinhoff’s chief executive, said in the statement.

At the close of the transaction, Mattress Firm will operate as a subsidiary of Steinhoff from Mattress Firm’s current headquarters in Houston.

“Steinhoff operates a decentralised management structure and therefore the Mattress Firm management team remains solely responsible for all operational decisions and implementation in the U.S.,” a Steinhoff representative said Monday via email.

Mattress Firm CEO Ken Murphy said in an emailed statement Monday, “We believe the potential Steinhoff acquisition is an ideal scenario for our employees, customers and shareholders.”

Mattress Firm announced Nov. 30 that it had agreed to buy rival Sleepy’s, combining the two largest mattress sellers in the U.S. into a network of 3,500 stores and 80 distribution centers across 48 states. The deal was completed in February.

In May, Mattress Firm said it planned to keep open the large Sleepy’s office and warehouse in Hicksville, though some employees were told they would be laid off. Sleepy’s had 636 employees at the 450,000-square-foot Hicksville operation last year, according to a report from Empire State Development, the state’s primary business-aid agency. ESD provided a $1.5 million grant to Sleepy’s in 2010 to support the Hicksville facility.

Sleepy’s, which was a family-owned business and has roots that date to 1931, has about 3,400 employees overall, including those at its more than 1,000 stores and other facilities. Its website shows about 40 stores on Long Island.

Mattress Firm’s stock closed Monday at $63.75, after jumping $34.01, or more than 114 percent.

With Bloomberg News

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