American mattress manufacturer Tempur Sealy will buy all of US-based Mattress Firm including Steinhoff’s 50.1% stake for $4bn.
Steinhoff, which has €10.2bn in debt due in June that it cannot pay and entered a complex restructuring process to save it from liquidation, will use its percentage from the sale to repay lenders.
In its restructuring plan documents, Steinhoff said that were it to sell Mattress Firm for $4bn, its stake after the bedding retailer settles its debt would be worth $1.4bn, meaning this is how much it is likely to make.
Tempur Sealy describes itself as the world’s largest manufacturer of mattresses and bedding products.
Steinhoff, technically insolvent with debt exceeding assets by about €3.5bn, had planned to list Mattress Firm in the US to raise funds, but delayed the listing in 2022, as markets are depressed due to rising interest rates.
The multinational holding company has said repeatedly it is continuing to explore options for the retailer before announcing the sale on Tuesday.
The payment for the sale will include about $2.7bn cash and 34.2-million shares in Tempur Sealy, with a valuation of $1.3bn, to be issued to Mattress Firm.
The shares can be sold after a lock-up period.
The sale is expected to be completed in the second half of 2024, subject to regulatory approvals. Tempur Sealy said it received a request for additional information from the Federal Trade Commission (FTC) in connection with its review of the transaction and it was co-operating with the FTC.
On completion of the transaction, Steinhoff will indirectly own about 7.5% of the combined company. Tempur Sealy plans to expand its board of directors by appointing two mutually agreed on Mattress Firm directors to the Tempur Sealy board.
Steinhoff will eventually have to sell all its assets to repay lenders, and will then cease to exist.
All Weather Capital’s Chris Reddy said the Mattress Firm sale is positive as it will afford Steinhoff some time before it needs to sell shares in SA retailer Pepkor and European discount retailer Pepco to settle more debt.
This means it can wait for a good price to sell its stakes.
Steinhoff owns just less than 44% of Pepkor, about 72% of Pepco and 100% of a furniture manufacturer and retailer in Australia.
It is now working on a restructuring plan with lenders that must go before the Dutch courts for approval after a shareholder and creditor vote, which is expected in June.
The sale of Mattress Firm, including its stake, will not change its restructuring plan, it said.
The plan, if passed, will enable lenders to take 80% ownership of Steinhoff. In exchange, they will agree to extend Steinhoff’s debt repayment to at least June 2026, giving it time to sell the rest of its assets.
The sale of Mattress Firm could help Steinhoff’s case when it approaches the Dutch court to approve its restructuring.
German activist shareholder group SdK has said it will oppose the restructuring in Dutch courts as it disagrees with giving the firm over to lenders. This is because it believes Steinhoff is worth more than its debt, and has argued Mattress Firm is worth more than Steinhoff’s estimate.
The sale of Mattress Firm to Tempur Sealy shows Steinhoff was correct about its value and that in total Steinhoff assets combined are still worth less than its debt pile — and so it requires restructuring
Founded in 1986, Mattress Firm is the largest mattress speciality retailer in the US, operating more than 2,300 brick-and-mortar retail outlets and a growing e-commerce platform. It employs more than 6,200 highly trained retail staff.
Together, Tempur Sealy and Mattress Firm’s combined global footprint will include about 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities and four state-of-the-art R&D facilities worldwide with 21,000 employees.
Update: May 9 2023
This article has been updated with new information.
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