News this week of a major merger in the world of bedding likely won't have too much of a direct impact on shoppers in Michigan's Great Southwest, however one of the newest stores in the Fairplain Plaza will have a new parent corporation at the helm if the merger is consummated in the long run. Mattress Firm, the nation's largest mattress retailer, has entered into a definitive merger agreement with Steinhoff International Holdings of South Africa for $64 per share in cash.
Based on the closing stock price of $29.74 on Friday, August 5, 2016, the offer represents a premium of 115-percent, and represents a total equity value of approximately $2.4-billion and an enterprise value of approximately $3.8-billion, including net debt.
The resulting merger will create the world's largest multi-brand mattress retail distribution network with 75 distribution centers in the U.S. alone.
Ironically, when Mattress Firm first signed on to build out their sizable new store in the Fairplain Plaza on M-139 in Benton Charter Township last winter, they themselves had just entered into an agreement to acquire all of the outstanding equity interests in HKM Mattress Holdings, which was the holding company of Sleepy's, the nation's second largest mattress retailer.
This week's merger agreement with Steinhoff International has been unanimously approved by the Mattress Firm board of directors and the management and supervisory boards of Steinhoff. Pursuant to terms of the merger agreement, a wholly owned subsidiary of Steinhoff will commence a tender offer to purchase the outstanding shares of Mattress Firm common stock at the price of $64 per share in cash. The acquisition is expected to close by or around the end of the third calendar quarter, subject to regulatory approvals, and satisfaction of a majority tender condition and other customary closing conditions.
At the close of the transaction, Mattress Firm will operate as a subsidiary of Steinhoff from Mattress Firm's current headquarters in Houston, Texas. Both Steve Stagner, executive chairman and chairman of the board of Mattress Firm, and Ken Murphy, president and CEO of Mattress Firm, will remain in their positions with Mr. Stagner also joining Steinhoff's executive committee.
Stagner says, "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." He adds, "This expertise will complement our diverse selection of products provided by our valuable partners. Steinhoff's management team shares out vision for 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."
Steinhoff is an integrated retailer that manufactures, sources and sells furniture, household goods and clothing in Europe, Africa and Australia. They operate more than 40 brands in 30 countries.
Markus Jooste is CEO of Steinhoff. He says, "The boards of Steinhoff and its management team are enthusiastic about the opportunities this transaction creates." He adds, "This will allow Steinhoff to now 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." He concludes, "We look forward to welcoming Mattress Firm employees to be part of one of the world's leading multi-format retailers."
Including the Fairplain Plaza store, Mattress Firm has more than 3,500 company-operated and franchised stores across 48 states with the largest geographic footprint in the United States among multi-brand mattress retailers. The Benton Harbor store is located between Rue 21 and Michael's at the Fairplain Plaza. It opened for business earlier this year.
