Wedbush Says Mattress Firm's Takeout Price Appears Reasonable
Mattress Firm Holding Corp (NASDAQ: MFRM) has entered into a definitive agreement to be acquired by Steinhoff International for $64.00 per share in cash. The takeout price represents a 115 premium to Mattress Firm’s closing price on Friday and represents “impressive value for shareholders,” Wedbush’s Seth Basham said in a report.
Analyst Seth Basham maintained a Neutral rating on Mattress Firm, while raising the price target from $30 to $64.
Surprised And Stunned
Terming the transaction as “surprising” and the valuation as “stunning,” Basham stated that the deal is likely to close as planned by the end of 3Q.
“Given MFRM's recent struggles and an increasingly challenging traffic environment for brick and mortar specialty mattress retailers due partly to competitive incursions from online-only players, we find 11.2x TTM pro forma EBITDA and 0.9x TTM pro forma net sales a rich price for even a strategic acquirer to pay for MFRM,” the analyst wrote.
He added, however, that the takeout price appeared “reasonable” compared to the recent historical transactions.
Steinhoff Enters North America
Steinhoff is the leading mattress manufacturer and retailer /distributor in the UK, France and South Africa. The acquisition of Mattress Firm would create “one of the world's largest multi-brand mattress retail distribution networks,” and enable Steinhoff to enter the US market, Basham commented.
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Latest Ratings for MFRM
|Sep 2016||SunTrust Robinson Humphrey||Maintains||Neutral|
|Aug 2016||Raymond James||Downgrades||Market Perform||Underperform|
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