Sleepyhead in $55m Australian buy up

Sleepyhead boss Craig Turner Photo / Brett Phibbs

Kiwi bed maker Sleepyhead has just announced a A$55 million deal to buy two Australian businesses, as it looks to ramp up offshore production.

The company announced this morning it had acquired Pacific Brands' Dunlop Foams and Sleepmaker businesses in a bid to secure greater market share.

The acquisition was announced to the Australian Stock Exchange this morning and is subject to regulatory approval.

As part of the transactions, Sleepyhead will sell its Wonderlay carpet underlay business to Pacific Brands for a "nominal" amount.

The deal is expected to be sealed in the next three months and comes just weeks after the family-owned business celebrated its 75th anniversary in New Zealand and signalled its intention to acquire a greater share of the Australian market.

The company has an eight per cent market share across the Tasman, with factories in Brisbane and Perth and now makes and sells more beds in Australia than it does in New Zealand.

"We are number one in New Zealand but our immediate goal is to be number one in Australia in three or four years," Sleepyhead boss Graeme Turner told nzherald.co.nz last month.

Graeme and fellow director Craig Turner said the company had been working for the past 18 months to identify a key strategic acquisition that would enable the company to become the leading bedmaker in the Australian market.

However a spokesperson for the company said Sleepyhead had no plans to list on the stock exchange.

The Turners said the move was a good outcome for the Pacific Brands' businesses with Sleepyhead's focus on locally based manufacturing to supply local markets.

All Dunlop Foams and Sleepmaker employees will transfer with the businesses to Sleepyhead.

"Sleepyhead is at the forefront of mattress manufacturing and innovation and adding its world-class expertise and experience to the brands and distribution of the Pacific Brands' businesses will be a tremendous fit for employees, customers and suppliers."

Sleepyhead was established in Auckland in 1935, and began exporting to Australia during the 1980s before moving into manufacturing in Brisbane in 1996.

The company currently operates six manufacturing facilities across Australia and New Zealand with more than 1000 staff.

Pacific Brands told the Australian Stock Exchange the divestment was in line with Pacific Brands transformation programme announced last year.

Foam manufacturer Dunlop Foams and bedding manufacturer Sleepmaker were not part of Pacific Brands' long-term strategic focus and price and terms agreed were commercially attractive, the company said.

The addition of Wonderlay would be a good fit with Pacific Brands' existing carpet underlay business, Dunlop Flooring, the company said.

The sale of Dunlop Foams and Sleepmaker is expected to result in a reduction in Pacific Brands' sales revenue and EBITA of about $160 million and $11 million respectively on a "full-year basis", the announcement said.