Mattress Firm said Monday it will buy competitor Sleepy's for $780 million and says the deal will add about $1 billion to its annual sales.
Mattress Firm expects to complete the purchase by mid-2016 pending approval from regulators. The Houston-based company has 2,400 stores in 41 states and expects about $2.5 billion in revenue in its current fiscal year. After buying Sleepy's, Mattress Firm said it will have about $3.6 billion in annual sales and 3,500 stores.
It says it is the largest retailer of specialty mattresses in the U.S., while Sleepy's is the second-largest. Mattress Firm said it expects to save $40 million in the three years after the deal closes.
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Sleepy's is owned by HMK Mattress Holdings, and most of its stores are in the Northeastern and mid-Atlantic U.S.
Mattress Firm Holding Corp. also reported preliminary results from its fiscal third quarter on Monday. It said it expects to post adjusted profit of 80 to 82 cents per share, with sales rising 51 percent to $699.5 million. Analysts had been expecting adjusted earnings of 77 cents a share and sales of $647 million, according to FactSet.
Shares of Mattress Firm rose $4.59, or 9.3 percent, to $53.95 in aftermarket trading after the deal and the preliminary results were announced.