New Zealand-based bed maker Sleepyhead is to buy Australian flexible foam manufacturer Dunlop Foams and bedding manufacturer Sleepmaker from Australian-based Pacific Brands.
Pacific Brands today said it was selling the operations for gross proceeds of about $A55 million ($NZ70.8m) and was acquiring Sleepyhead's Australian carpet underlay business Wonderlay for a nominal amount.
Sleepyhead joint managing directors Graeme and Craig Turner said Australia was a key market for their company as it looked to boost production and build the company into a global brand.
"We've steadily built our manufacturing base and market share in the highly competitive Australian market over the past decade and this acquisition is the next step in our plans for expansion."
Sleepyhead had been looking for a key strategic acquisition for the past 18 months to provide the size and scale that would enable the company to reach its goal of becoming the leading bed maker in the Australian market, the Turners said.
Pacific Brands said that Dunlop Foams and Sleepmaker were not part of Pacific Brands' long term strategic focus and the price and terms agreed were commercially attractive.
The transaction, which was subject to approval from regulator the Australian Competition & Consumer Commission, was expected to be completed during the next three months.
The sale of Dunlop Foams and Sleepmaker were expected to result in a reduction in Pacific Brands' sales revenue of about $A160m on a full year basis, Pacific Brands said.
The sale proceeds would exceed net tangible assets, but Pacific Brands would incur a one-off non-cash loss on sale of around $A35m on completion of the transaction.
