Houston -- In a deal that will create a national specialty bedding retail powerhouse, Mattress Firm Holding Corp. has agreed to acquire rival The Sleep Train Inc. for about $425 million. As part of the deal, Mattress Firm said that it will also assume certain additional liabilities totaling about $15 million.
Sleep Train operates approximately 310 specialty mattress stores, primarily in California, Oregon, and other Western states. It reported net sales of $471 million for the 2013 fiscal year.
Mattress Firm plans to continue operating under both the Mattress Firm and Sleep Train banners and will also keep Sleep Train's corporate headquarters near Sacramento, California.
Sleep Train CEO Dale Carlsen will become president and chief strategy officer after the acquisition is complete. He will also become Mattress Firm's vice chairman.
Sleep Train COO Rob Killgore will become co-COO, sharing the post with current Mattress Firm COO Ken Murphy.
According to Mattress Firm, the purchase will add a significant West Coast presence with minimal store overlap and create the nation’s largest mattress specialty retailer, with pro forma sales approaching $2 billion annually and more than 2,000 stores. Mattress Firm has identified more than $20 million of potential cost synergies by the third year after closing.
“The acquisition of Sleep Train will establish Mattress Firm as the first border to border, coast to coast multibrand mattress specialty retailer in the United States,” said R. Stephen Stagner, Mattress Firm’s CEO.
The deal is expected to close by the end of the fourth fiscal quarter of 2014.
Mattress Train also announced results for its second quarter of fiscal 2014. Net income slightly dropped 1% to $14.12 million from $14.3 million in the same period the prior year, driven by acquisition-related costs and ERP system implementation costs.
Net sales rose 35% to $410 million from $302.5 million, and same-store sales rose 9.7%.