Sheela Foam, the owner of the ‘Sleepwell’ brand, has entered into agreements to acquire stakes in two companies in the furniture industry. The company will acquire a 35% stake in online furniture retailer Furlenco furniture for Rs 300 crore. Additionally, Sheela Foam will acquire a 95% stake in Kurlon Enterprises for Rs 2,150 crore.
The acquisition of Furlenco furniture will mark Sheela Foam’s entry into the rapidly growing online furniture e-commerce business, enabling the company to tap into new age customers. The acquisition of a majority stake in Kurlon Enterprises will allow Sheela Foam to consolidate its position in the fragmented mattress market in India.
Once the buyout is completed by November, Sheela Foam will have a pan-India presence and diversification in the customer base. The acquisition of Kurlon Enterprises values the company at Rs 2,150 crore, while the acquisition of Furlenco furniture values it at Rs 857.14 crore.
Sheela Foam plans to become an undisputed market leader in the mattress market and expects to command a combined market share of around 21% in the modern mattress market in India. The acquisition will also help accelerate Sheela Foam’s growth and enhance profitability.
By acquiring Furlenco furniture, Sheela Foam aims to diversify its presence in the furniture sales market and become a full portfolio company in the segment. The investment in Furlenco will provide opportunities to leverage its digital capabilities for Sheela Foam’s own products. There are also plans to create synergies by selling input products such as foam to manufacture Furlenco products.
This acquisition will enable Sheela Foam to have a robust distribution network and production efficiencies, resulting in cost savings. It will also help the company expand its market reach in both urban and rural India.
The furniture market in India is much bigger than Sheela Foam’s current playing field, with a total addressable market of Rs 1 lakh crore. The acquisition of stake in Furlenco and Kurlon Enterprises will allow Sheela Foam to tap into this vast market and explore new growth opportunities.
Shares of Sheela Foam ended nearly 6% higher on the National Stock Exchange following the announcement of the acquisitions.
Sources: The Economic Times
