Mattress Firm to grow
Plans to acquire Mattress Discounters
By David Perry -- Furniture Today, March 11, 2007
Houston — Mattress Firm has signed a letter of intent to acquire Mattress Discounters of Upper Marlboro, Md., a deal that will add more than 140 locations as fast-growing Mattress Firm expands into the Northeast.
The move is part of an aggressive growth strategy at Houston-based Mattress Firm, which also recently signed a letter of intent to acquire 15-unit Bedtime Mattress Co. in Las Vegas. That deal is expected to close in the next few weeks.
Mattress Firm's latest move will increase its presence on the Atlantic seaboard.
Mattress Discounters is the market leader in most of the areas where it has stores. Those areas include Baltimore, Boston, Providence, R.I., Richmond, Va., the Washington metro area and New Hampshire, Mattress Firm officials said.
Mattress Firm ranked as the No. 3 U.S. bedding retailer on Furniture/Today's list of the Top 25 Bedding Retailers, based on estimated 2005 bedding sales of $328 million. Mattress Discounters was No. 17, with estimated 2005 bedding sales of $100 million.
The buy will mark Mattress Firm's entry into New Hampshire, Rhode Island, Massachusetts, Maryland, Virginia and Washington. It will give Mattress Firm over 500 stores in 40 markets across 25 states. The retailer, founded in 1986, currently operates over 350 stores in 33 markets.
Terms of the acquisition, which is now in the due diligence phase, were not disclosed.
"This acquisition allows Mattress Firm to enter several new, fast-growing markets and is another step in our overall expansion strategy that includes both organic and acquisition growth," said Gary Fazio, CEO of Mattress Firm.
"Mattress Discounters has developed a solid reputation and loyal customer following throughout the Northeast, and Mattress Firm is committed to carrying on this tradition," he added. "At the same time, we will bring our unique retail experience, sleep expertise and the broadest selection of products and brands in the mattress industry to create a unique destination for consumers."
Mattress Discounters opened its first location in 1978 and employs more than 500 people across five states. Its stores, known as Sleep Centers, are similar to Mattress Firm stores, offering a similar product mix with a focus on providing exceptional customer service, Mattress Firm officials said.
Mattress Discounters operates a manufacturing facility that produces the company's private-label mattresses. Mattress Firm will assume control of that plant after the acquisition.
"I am proud to have worked with such a dedicated team of individuals," said Steve Newton, CEO of Mattress Discounters, who will leave the company.
"The effort and commitment that everyone has shown over the past years has led to true value creation for our stakeholders," Newton said. "It is a bittersweet moment for me, but I believe that this is a tremendous opportunity for the vast majority of our 500 employees.
"It was very clear to us that Mattress Firm was an excellent cultural fit, and under Gary's stewardship, I believe that our people and our company will continue to prosper and grow."
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