Sheela Foam acquires 94.66% stake in Kurlon Enterprises for Rs 2,035 crore

Sheela Foam, the maker of mattress brand Sleepwell, said it will acquire a 94.66% stake in Kurlon Enterprises for Rs 2,035 crore.

The company also said it would acquire a 35% stake in online furniture firm House of Kieraya, the parent company of Furlenco for Rs 300 crore.

At its meeting held on July 17, 2023, the company's board approved the acquisition of Kurlon Enterprise and House of Kieraya, Sheela Foam said in a regulatory filing.

"The company is acquiring 94.66% of KEL's (Kurlon Enterprises) share capital at an equity valuation of Rs 2,150 crore, subject to customary adjustments for net working capital, debt and surplus cash, if any," it said.

In a statement, the company said the cost of acquiring 94.66% in KEL is around Rs 2,035 crore.

KEL deals mainly in the manufacture and marketing of foam and coir-based home comfort products across the 'sit and sleep' categories like mattresses, 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. 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," Sheela Foam Chairman and Managing Director Rahul Gautam said in a statement.

He further said, "With these two within its fold, Sheela Foam is at an inflexion point, where opportunities created by inorganic activity would greatly strengthen the business model and propel a higher level of organic growth".

"The acquisition will help the company to consolidate the existing fragmented market of mattresses and foam-based products," Sheela Foam said.

It will also help diversify the customer base as the company is the leader in northern and western India whereas KEL has strengths in southern and eastern regions of India. This acquisition will help in extending a pan-India footprint, it added.

"The Kurlon deal gives Sheela Foam an undisputed leadership across major product categories with its flagship brand Sleepwell's strength in foam, and acquired brand Kurl-on's strength in rubberised coir; wherein both these companies are leaders in their respective product segments," Sheela Foam said, adding it would now command a combined market share of around 21% in the modern mattress market in India.

KEL had a turnover of Rs 767.25 crore in FY2020-21 and Rs 808.80 crore in FY 2021-22.

The Furlenco deal will help Sheela Foam to enter the fast-growing branded furniture and furniture rental market, and an opportunity to further diversify its presence even in the furniture sales market and become a full portfolio company in the segment, the company said.

Furlenco has a strong online presence and operates in cities, including Bangalore, Mumbai and Delhi-NCR.  It had clocked a turnover of Rs 129 crore in FY22 and Rs 152 crore in FY23.

The investment in Furlenco would also create synergies by selling input products, such as foam by Sheela Foam to manufacture Furlenco products. Sleepwell and Kurl-on exclusive stores may be made available with Furlenco furniture offerings, the statement said.

Info@BestMediaInfo.com