Sleepwell maker to buy 94.66 pc stake in Kurlon Enterprises for Rs 2,035 cr
Sheela Foam Ltd, the maker of mattress brand Sleepwell, on Monday said it will acquire a 94.66 per cent stake in Kurlon Enterprises Ltd for Rs 2,035 crore.
The company also said it will acquire a 35 per cent stake in online furniture firm House of Kieraya Pvt Ltd for Rs 300 crore.
The companys board at its meeting held on July 17, 2023, has approved the acquisition of Kurlon Enterprise Ltd and House of Kieraya Pvt Ltd, Sheela Foam said in a regulatory filing.
“The company is acquiring 94.66 per cent of KELs (Kurlon Enterprises Ltd ) share capital at an equity valuation of Rs 2,150 crore, subject to customary adjustments for net working capital, debt and surplus cash, if any,” it said.
In a statement, the company said the cost of acquiring 94.66 per cent in KEL is around Rs 2,035 crore.
KEL deals mainly in the manufacture and marketing of foam and coir-based home comfort products across the sit and sleep categories like mattresses, furniture cushions, pillows and coverings.
“With the coming together of Kurl On, Sheela Foam will further cement its leadership position in the modern mattress market. The investment of Furlenco would give it a very strong entry into the branded furniture market, and a much bigger market than its existing market,” Sheela Foam Chairman & Managing Director Rahul Gautam said in a statement.
He further said, “With these two within its fold, Sheela Foam is at an inflexion point, where opportunities created by inorganic activity would greatly strengthen the business model and propel a higher level of organic growth”.
KEL was established in 1962 as Karnataka Coir Products, part of the South India-based Pai family business group, and is currently headed by Jyothi Pradhan, the filing added. The entity was renamed Kurlon Ltd in 1995. KEL was set up as a subsidiary in 2011 by Kurlon Limited. Subsequently, the business was transferred to KEL in 2014.
“The acquisition will help the company to consolidate the existing fragmented market of mattresses and foam-based products,” Sheela Foam said.
It will also help diversify the customer base as the company is the leader in northern and western India whereas KEL has strengths in southern and eastern regions of India. This acquisition will help in extending a pan-India footprint, it added. “The Kurlon deal gives Sheela Foam an undisputed leadership across major product categories with its flagship brand Sleepwells strength in foam, and acquired brand Kurl-ons strength in rubberised coir; wherein both these companies are leaders in their respective product segments,” Sheela Foam said, adding it would now command a combined market share of around 21 per cent in the modern mattress market in India. KEL had a turnover of Rs 767.25 crore in FY2020-21 and Rs 808.80 crore in FY 2021-22.
Sheela Foam further said it would acquire a 35 per cent stake in House of Kieraya Pvt Ltd, which runs the online furniture business Furlenco for Rs 300 crore, subject to customary working capital and other adjustments.
The Furlenco deal will help Sheela Foam to enter the fast-growing branded furniture and furniture rental market, and an opportunity to further diversify its presence even in the furniture sales market and become a full portfolio company in the segment, the company said.
Furlenco has a strong online presence and operates in cities, including Bangalore, Mumbai and Delhi-NCR. It had clocked a turnover of Rs 129 crore in FY22 and Rs 152 crore in FY23. The investment in Furlenco would also create synergies by selling input products, such as foam by Sheela Foam to manufacture Furlenco products. Sleepwell and Kurl-on exclusive stores may be made available with Furlenco furniture offerings, the statement said.
Sheela Foam-Furlenco can now offer Refurbishment as a Service (RaaS) for furniture, the company said, adding it would also benefit from Furlencos digital-first, direct-to-customer and e-commerce capabilities as well as its design capabilities.
(Except for the headline, this story has not been edited by The Federal staff and is auto-published from a syndicated feed.)