Sheela Foam, owner of Sleepwell brand, has agreed to acquire rival mattress maker Kurlon and a 35% stake in furniture rental startup Furlenco for a total of Rs 2,335 crore ($285 million).
The board of Sheela Foam, owner of Sleepwell brand, has approved the acquisition of rival mattress maker Kurlon and will also acquire a minority 35% stake in furniture rental startup Furlenco, for nearly Rs 2,335 crore.
The listed mattress maker will acquire 94.7% stake in Kurlon, operated by Kurlon Enterprises Ltd, for Rs 2,035 crore, valuing the company at Rs 2,150 crore, it said in a statement. The development comes at a time when Sheela Foam is looking to consolidate a fragmented market. It will also help the company diversify its customer base and distribution network, the statement further noted.
“With these two within its fold, Sheela Foam is at an inflection point, where opportunities created by inorganic activity would strengthen the business model and propel a higher level of organic growth, "Rahul Gautam, chairman & managing director, Sheela Foam said.
Kurlon, which was started in 1962 as a part of Pai family business group, manufactures and sells foam-based and coir-based home comfort products across categories like mattress, 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,” said Gautam.
The combined entity will have a market share of about 21% in the modern mattress market in India, which has seen the emergence of venture-backed companies in the sector including Wakefit, Springwel and Duroflex.
Shares of Sheela Foam ended Monday's session with gains of nearly 6% on BSE, at Rs 1,118.10 apiece.
In addition, Sheela Foam’s stake buy in Furlenco, operated by House of Kieraya Pvt Ltd, will valuing the latter at Rs 857 crore. The company had raised $140 million (Rs 1,000 crore) in a round led by Zinnia Global Fund, in a mix of debt ( Rs 850 crore) and equity (Rs 150 crore) in 2021.
Furlenco, founded in the year 2012, operates in cities including Bengaluru, Mumbai and Delhi NCR, where it sells new and refurbished furniture.
The company, which is not a profitable entity yet, has been struggling. The furniture rental startup has been in the news after it laid off 180-200 employees in late March last year citing restructuring. The company has also outsourced key functions such as asset management and asset collection to third parties since then.
“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,” said Gautam.
The company said the deal will help mattress maker to diversify its offerings and enter the fast-growing branded furniture and furniture rental market, as it aims to become a full portfolio company in the segment.
“The diverse products, integrated manufacturing, distribution synergies, pan-India footprint and Digital-First play will help to tap new-age customers,” Gautam said on the two acquisitions.