Mattress Firm Holding Corp. (MFRM) Stock up More Than +100 Percent on Steinhoff International Takeover

Shares of Mattress Firm Holding Corp. (MFRM) were trading up +34.00 or +114.32 percent to $63.74 per share in Monday’s premarket after the company announced early this morning that it had entered into a definitive agreement to be acquired by South African company Steinhoff International Holdings N.V. Mattress Firm Holding Corp. stock closed at $29.74, up +0.43 or +1.47 percent in Friday’s regular trading session.

Stock Analysis

Founded in 1986, Houston, Texas based Mattress Firm Holding Corp. is a major domestic retailer of mattresses and bedding.
Mattress Firm is the nation’s largest bedding retailer, offering traditional and specialty mattresses and bedding, as well as a large array of bedding accessories and other related products. The company’s mattress brands include Sealy, Stearns & Foster, Tempur-Pedic, Simmons, Serta and Beautyrest among others. Mattress Firm Holding operates over 3,500 company-owned and franchised stores in 48 United States under the Sleepy’s, Sleep Train and Mattress Firm brands. The company had pro forma sales of $3.5 billion last year and employs approximately 4,000 people.

Steinhoff International Holding N.V. was originally founded in 1964 in Germany by Bruno Steinhoff. The company originally sourced furniture from the European communist bloc to sell in Western Europe. In 1997, the company acquired the South African company, Gommagomma and moved its headquarters to South Africa. Steinhoff International is now a major retailer of furniture and household goods in Europe, Africa and Australia operating over 40 brands through 6,500 stores in 30 countries. The company’s stock is dually listed on the Frankfurt Stock Exchange and the Johannesburg Stock Exchange.

The definitive merger agreement will have Steinhoff International Holdings pay $64.00 per share in cash for each share of Mattress Firm, which represents a premium of +115 percent over Mattress Firm stock’s closing price of $29.74 on Friday. The total equity value of the transaction comes to about $2.4 billion, with a total enterprise value of the transaction of approximately $3.8 billion which includes Mattress Firm’s net debt.

Ken Murphy, President and Chief Executive Officer of Mattress Firm said in the company’s press release this morning that, “Today's announcement marks an exciting new chapter for Mattress Firm that will open up future opportunities for our employees, our customers and our business partners. We remain focused on our long-term strategy to build a national chain under one banner in the U.S. and we will continue activating and unlocking the true power of all of the assets we have assembled to truly become the preferred choice for better sleep.”

The merger will create the world’s largest multi-brand mattress retail distribution network and has been approved by the Mattress Firm board and the management and supervisory boards of Steinhoff. The deal is expected to close by the end of this year’s third quarter.

After the deal’s close, Mattress Firm will operate as a wholly owned subsidiary of Steinhoff from the company’s current location in Houston, Texas. Chief Executive Ken Murphy and Steve Sanger, Executive Chairman and Chairman of the Board of Mattress Firm will remain in their positions with Mr. Sanger to join Steinhoff’s executive committee. The merger is great news for Mattress Firm investors after the company’s stock has been pummeled since trading as high as $65 per share one year ago.

Other News About MFRM

Hard To Sleep Well At Night Owning Mattress Firm Stock

This article appeared a week ago, with the stock having lost -32 percent of its value.

Mattress Firm Holding Corp. – Value Analysis (NASDAQ:MFRM) : July 19, 2016

Company was given a score of 44 last month when compared to some of its peers.

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Published on Aug 8, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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