Sleep Country Canada to be Acquired by Fairfax for $1.7 Billion
Sleep Country Canada (TSX: ZZZ) announced today that it has entered into an agreement with Fairfax Financial Holdings Limited (TSX: FFH) to be acquired in a transaction valued at approximately $1.7 billion.
Under the terms of the agreement a newly-formed subsidiary of Fairfax will acquire all of the issued and outstanding common shares of Sleep Country for $35.00 in cash per share. This purchase price represents a 34% premium to the 20-day volume-weighted average price of Sleep Country’s shares on the TSX as of July 19, 2024, and a 28% premium to the closing price on the same date.
“We have concluded that this transaction is in the best interests of Sleep Country and is fair to our shareholders,” said Christine Magee, Chair of the special committee of independent directors of Sleep Country that oversaw the negotiation of the transaction. “Following a comprehensive assessment and our extensive negotiations with Fairfax, we are pleased to have reached an agreement that provides certainty of significant and immediate value to shareholders.”
Stewart Schaefer, President and CEO of Sleep Country, echoed Magee’s sentiments, highlighting the achievements of his team. “I am extremely proud of the accomplishments of our team. This transaction clearly demonstrates the value and strength of our brands and organization. We look forward to partnering with Fairfax in this new chapter of Sleep Country where we can continue to execute on our strategic initiatives and transform lives by awakening Canadians to the power of sleep.”
Fairfax’s Chairman and CEO, Prem Watsa, expressed enthusiasm for the acquisition. “We are thrilled to have Sleep Country and its talented team led by Stewart Schaefer join the Fairfax Group. Sleep Country is Canada’s leading sleep retailer with brands that are recognized by all Canadians. We look forward to working with Stewart and the entire Sleep Country team to further develop this remarkable Canadian success story over the long term.”
The transaction is expected to close in the fourth quarter of 2024, subject to customary conditions, including shareholder, court, and regulatory approvals. Upon completion, Sleep Country will apply to delist its common shares from the TSX and cease to be a reporting issuer under Canadian securities laws.
The arrangement remains subject to approval by two thirds of the company’s shareholders, with directors and officers, whom own 1.7% of the company, agreeing to vote in favour of the transaction. The agreement includes customary non-solicitation provisions and a termination fee of $36.5 million payable to Fairfax if Sleep Country accepts a superior proposal.
Sleep Country Canada is the country’s leading specialty sleep retailer, operating under multiple banners including Sleep Country Canada, Dormez-vous, Endy, and others, with 307 stores and 18 warehouses nationwide.
Sleep Country last traded at $27.28 on the TSX.
Information for this briefing was found via Sedar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
