Sleep Country Canada Holdings Inc. says it has agreed to be sold to Fairfax Financial Holdings Limited for around $1.7 billion. Pedestrians walk past a Sleep Country Canada store on Yonge Street in Toronto on Tuesday, October 19, 2021. THE CANADIAN PRESS/Evan Buhler
TORONTO – Sleep Country Canada Holdings Inc. says it has agreed to be sold to Fairfax Financial Holdings Ltd. for around $1.7 billion.
The deal announced Monday would see a subsidiary of the Toronto-based financial holding company acquire all issued and outstanding common shares of Sleep Country for $35 per share.
A press release announcing the agreement did not detail Fairfax’s plans for the mattress retailer, which is also headquartered in Toronto and counts 307 stores and 18 warehouses across its collection of brands. Those brands include retailers Sleep Country and Dormez-vous, bed-in-a-box companies Endy, Casper Canada and Silk & Snow, premium bedding chain The Rest and blanket business Hush.
Sleep Country president and chief executive Stewart Schaefer said the transaction “clearly demonstrates the value and strength of our brands and organization.”
Christine Magee, who co-founded Sleep Country in 1994 and now chairs a special committee of independent directors, added the deal was the product of “extensive negotiation” and has gone through a comprehensive assessment process.
She feels it will provide “immediate value to shareholders” who she thinks will see the deal as “fair” and in their “best interests.”
Fairfax is best known for providing reinsurance and property and casualty insurance in Canada, the United States, and other international markets.
The business run by billionaire Prem Watsa, who is referred to as the “Canadian Warren Buffet,” often dabbles in retail deals. Fairfax bought Toys “R” Us Canada in 2018 for $300 million after the toy store chain reorganized under the Companies’ Creditors Arrangement Act. (Fairfax sold the business to HMV-owner Putman Investments in 2021.)
Fairfax inked a deal in 2022 to purchase and take private Recipe Unlimited Corp., a Vaughan, Ont.-based company behind more than 20 fast-food brands including Swiss Chalet, Harvey’s and The Keg.
It has also owned athletic retailers Sporting Life and Golf Town.
The Sleep Country deal will only add to Watsa and Fairfax’s retail prowess.
Watsa, chairman and chief executive of Fairfax, said in a press release that his company looks forward to working with Schaefer and Sleep Country “to further develop this remarkable Canadian success story over the long term.”
Sleep Country has also left the door open to entertain other offers. It says the deal gives the business the right to terminate the agreement and accept a superior proposal in some unspecified circumstances, though Fairfax will have the right to match any offer.
In the event a better suitor surfaces and Sleep Country takes its offer instead, the company will pay Fairfax a termination fee of $36.5 million.
Should Sleep Country continue to move forward with Fairfax, it expects the deal to close in the fourth quarter of 2024. The agreement is subject to court approval and other customary conditions, including a shareholder vote.
Once completed, Sleep Country says it will apply to have its common shares delisted from the Toronto Stock Exchange.
News of the deal pushed Sleep Country’s share price up almost 28 per cent, or $7.51, to $34.79 in Monday morning trading. Fairfax’s share price rose less than one per cent to $1,599.91.
This report by The Canadian Press was first published July 22, 2024.
Companies in this story: (TSX:ZZZ, TSX:FFH)
