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South African Company Takes Over Houston-Based Mattress Firm In Multi-Billion Dollar Merger

The acquisition will create one of the world’s largest mattress retail distribution networks.


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South Africa-based Steinhoff International Holdings is acquiring Houston-based Mattress Firm for $2.4 billion, or $64 per share – a premium of 115 percent over the company's closing stock price of $29.74 on Friday.

The deal's enterprise value, which includes debt, is $3.8 billion.

The merger will create one of the largest mattress distribution networks in the world, according to a presentation by Steinhoff.

It comes after Mattress Firm, which has a 25 percent market share in the United States, had been buying other companies itself for the past few years.

"They had a hard time integrating it. They got shorted on the market," said Jonathan Baude, a writer for The Deal, a publication focused on mergers and acquisitions. He said Mattress Firm has been accumulating more than $1 billion in debt. "So Steinhoff will come in at a good time for them."

Steinhoff makes and sells furniture, household goods and general merchandise in Europe, Africa and Australia. It also owns car dealerships.

This is its first venture into the North American market.

Baude said the company wants to have exposure to the strong dollar, especially after the drastic decline of the British pound after the vote to leave the European Union.

Based on Steinhoff's history, Baude doesn't think the merger will affect jobs here in Houston. But he said the firm is known for going for the cheapest while maintaining quality.

"For instance, in Europe they'll source from Eastern Europe rather than the country where they actually do the retail," Baude said. "And it may be that the supply chain will be affected rather than the actual jobs at Mattress Firm itself."

Steinhoff declined a request for an interview.

Mattress Firm CEO Ken Murphy wasn't available in time for this story, but in an emailed statement, he called the announcement an "ideal scenario for our employees, customers and shareholders."

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