Sleepwell owner Sheela Foam to buy rival Kurlon Enterprise for Rs 3,250 cr
Sleepwell mattress owner Sheela Vomme will take over rival Kurlon Enterprise, buying 100 per cent of the company in two tranches for a cash sum of Rs 3,250 crore, Moneycontrol reports.
It added that the deal is expected to be completed within the next few months.
According to the report, the acquisition of Kurlon Enterprise will help Sheela Foam nearly double its market share.
If this deal goes through, Sheela Foam’s market share in India’s regulated mattress segment could rise to 35-40 percent from 20-25 percent.
“Sheila Foam has a strong presence in the north and west, while Corlon is in the south and east,” said a person familiar with the deal. adding that the deal will result in cost savings and synergies.
It is expected to add about Rs 900 crore to the company’s line listed at the consolidated level.
Furthermore, as a result of this deal, Sheela Foam will be able to source more raw materials, such as TDI (toluene diisocyanate), at lower prices.
“After the deal, the joint purchase of TDI by Sheela Foam for itself and Kurlon will help the company get a bigger discount,” the person said.
He added that apart from the sources of raw materials, there will be operational synergies at the factory level, in addition to improving capacity utilization at the two companies’ factories.
Mattress market in India and its growth
In India, there are many branded and non-branded mattress companies. Branded players account for only 40 percent of the total modern Indian mattress market. In the branded market, there are 25 players, with Sleepwell and Corlon owning the controlling shares.
The mattress market in India was estimated to be worth $1.7 billion in fiscal year 2019 and is expected to more than double to $2.8 billion by fiscal year 2019.
The branded regulated mattress industry market share increased from 29 percent in fiscal 2014 to 35 percent by fiscal 2019, and is expected to reach 40 percent by fiscal 2014.
According to industry estimates, the total mattress market in India is about 18.6 million units, with new demand of about seven million units annually.