S African retailer Steinhoff to buy US-based Mattress Firm for $3.8 bn

South African retailer Steinhoff International Holdings NV yesterday struck a deal to buy US-based Mattress Firm Holding Corp, for $3.8 billion including debt.

Steinhoff will pay shareholders of the largest specialty bedding retailer in the US, $64 per share in cash, a premium of about 115 per cent to the company's Friday closing price of $29.74.

The deal is subject to completion of a successful tender offer for Mattress Firm's shares. The transaction is expected to close in the third quarter of 2016.

Steinhoff intends to finance the proposed acquisition through a combination of bank and bridge loans.

With more than 3,500 company-operated and franchised stores across 48 states, Mattress Firm has the largest geographic footprint in the United States among multi-brand mattress retailers.

Founded in 1986, the Houston-based company is the largest bedding retailer in the US with 2015 sales of over $3.5 billion.

Through its brands including Mattress Firm, Sleepy's and Sleep Train, the company 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.

In February, Mattress Firm expanded in the US mattress retail market after it acquired HMK Mattress Holdings, the holding company of Sleepy's, the second largest specialty mattress retailer in the US, for $780 million.

Steinhoff, the $22-billion furniture conglomerate, said that the deal will create the world's largest multi-brand mattress retail distribution network and facilitate its entry into the US.

Markus Jooste, CEO of Steinhoff said, ''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.''

''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,'' he added.

Steinhoff, which has a primary listing on the Frankfurt Stock Exchange and a secondary listing on the Johannesburg Stock Exchange, is an integrated retailer that manufactures, sources and retails furniture, household goods and general merchandise in Europe, Africa and Australasia.

It has a market cap of €22 billion and 2015 net profit for the nine-months ended 31 March 2016 of €1.1 billion.