Mattresses retailer Sleep Country acquired by Fairfax Financial for CA$1.7b
Investment firm Fairfax Financial has agreed to acquire Sleep Country Canada, a major Canadian sleep retailer, in a deal valued at CA$1.7 billion.
Transaction snapshot
Deal value: CA$1.7 billion ($1.9 billion)
Deal multiples: 1.8x revenue; 8.9x EBITDA
Deal type: All-cash acquisition
Investors: Fairfax Financial
The deal will see Fairfax, through a newly formed subsidiary, buy all outstanding shares of Sleep Country for CA$35 each. This represents a 34% premium to Sleep Country's 20-day volume-weighted average share price as of 19 July 2024.
Sleep Country's board has recommended shareholders vote in favour of the deal, with directors and officers holding about 1.7% of shares already agreeing to support the takeover.
The transaction, expected to close in the fourth quarter of 2024, will result in Sleep Country being taken private and its shares delisted from the Toronto Stock Exchange.
Sleep Country operates 307 stores across Canada under several brands, including Sleep Country, Dormez-vous, Endy, Silk & Snow, Hush and Casper Canada. The company also has 18 warehouses and an Ecommerce presence.
Stewart Schaefer, Sleep Country's CEO, expressed pride in the company's achievements and looked forward to partnering with Fairfax. Prem Watsa, Fairfax's CEO, praised Sleep Country as Canada's leading sleep retailer with nationally recognised brands.
The deal comes as Sleep Country faces a challenging retail environment. While its revenue grew 1.6% year-on-year in the first quarter of 2024, same-store sales dropped 1.6% and earnings declined sharply. The company cited volatile consumer shopping patterns amid higher interest rates and rising unemployment as factors affecting performance.
The acquisition is subject to customary conditions, including shareholder and court approvals, as well as regulatory approval under Canada's Competition Act.
