Shares of Mattress Firm Holding Co. (NASDAQ:MFRM) closed up 114.4% on Monday after news came out on Sunday that the company is to be bought out by Steinhoff International Holdings.
Based in Houston TX, MFRM is a mattress retailer in the United States. The South Africa-based Steinhoff also sells furniture along with other household items, and also operates automotive dealerships. This latest acquisition is meant to provide the company with presence in the U.S., something it did not have before.
Last month, the company also acquired British firm Poundland Group PLC, the country’s equivalent of a dollar store.
Steinhoff will pay $64 per share of MFRM in cash, representing a 115% premium over the company’s Friday closing value of $29.74. According to Steinhoff’s official release, the merger will “create the world’s largest multi-brand retail distribution network and facilitate Steinhoff’s entry into the U.S. similar to the European retail market, where Steinhoff is a leader.”
The transaction is expected to close at, by, or around the end of the third calendar quarter.
The deal comes across as quite generous for MFRM, which has gone through some hard times recently. It has seen downward earnings estimate revisions for this quarter, along with the current and following fiscal years.
Current quarter estimates stand at $0.63 in earnings per share, down from the $0.91 estimate of 60 days ago, while fiscal year estimates are down to $2.19 per share from the $2.50 estimate of 60 days ago.
Furthermore, MFRM has seen a year-to-date price change of -34.3%. Before the announcement of this deal, MFRM sat at a Zacks Rank #5 (Strong Sell) due to the aforementioned metrics.
MATTRESS FIRM (MFRM): Free Stock Analysis Report
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