Sleepyhead deals boost presence in Oz

Craig Turner, joint managing director of Sleepyhead. Photo / Brett Phibbs

New Zealand bed maker Sleepyhead's $71 million buy-up of two Australian businesses will more than double the firm's market share across the Tasman to in excess of 20 per cent, says its boss.

The 75-year-old, family-owned company will acquire Pacific Brands' Sleepmaker bedding business and flexible foam maker Dunlop Foams.

"There's a lot of competition in Australia, but [the acquisition] gives us a nice lift - it's a leg up," Sleepyhead joint managing director Craig Turner said.

Sleepyhead's acquisition was announced on the ASX yesterday and is subject to the approval of the Australian Competition and Consumer Commission (ACCC).

As part of the transaction Sleepyhead will sell its Wonderlay carpet laying business to Pacific Brands, which is listed on both the NZX and ASX, for a "nominal amount".

A spokesperson for the company said Sleepyhead had no plans for a stock exchange listing.

The deal is expected to be sealed within the next three months.

Turner said Sleepyhead worked with its "incumbent bankers" to finance the acquisition.

"Some debt's required, for sure," he said. "We think it [the $71 million] is a fair price ... it wasn't a steal and it wasn't over the top."

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.

Dunlop Foams and Sleepmaker, which includes the Simmons and Dunlopillo brands, were singled out because there was no customer crossover between those businesses and Sleepyhead, he said. "It just means we can get into a whole new customer base."

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

Beyond Australia, Turner said the company was eyeing up an acquisition opportunity in Malaysia - a bedding plant.

"That's a little way off," he said. "Australia's the one we want to nail first, obviously."

In addition to the newly announced deal, Sleepyhead will open a $35 million bed factory in Melbourne in December. The company has also announced plans to export beds to Sri Lanka and India.

Pacific Brands told the ASX its divestment was in line with its transformation programme announced last year.

DUNLOP FOAMS

* Manufacturer, convertor and distributor of flexible, slabstock foam.
* The business has production and converting facilities in all states of Australia, which supply customers in the bedding, furniture and other industries.

SLEEPMAKER

* Bedding manufacturer with facilities in all states of Australia except South Australia.
* Supplies beds to retail and commercial customers under brands such as Sleepmaker, Dunlopillo and Simmons.