Professional Documents
Culture Documents
Strategic Rationale
Creates First
Truly National
Mattress
Specialty
Retailer
#1
Opportunity to
Leverage
National Scale
Benefits
Acquires
Attractive
Store Base and
Team in Key
Markets
Over 1,050 stores with strong penetration in difficult to enter markets in the
Northeast and Mid-Atlantic
Over 3,000 talented employees
Strong leadership team with unmatched experience operating in the
Northeast and Mid-Atlantic markets
Generates
Significant
Synergy
Opportunities
Earnings
Accretion and
Cash Flow
Generation
2
Transaction Overview
Key Items
Purchase Price
Description
Total consideration of approximately $780 million
Expected to create an asset step-up, with an annual cash tax benefit of over $7.7 million
for 15 years and a present value of approximately $77 million along with $108 million of
depreciation and amortization deductions on the carryover tax basis of other assets, with
an annual cash tax benefit of approximately $3.7 million and a present value of
approximately $30 million(2)
Adjusted enterprise value of approximately $673 million (3)
Financing
Accretion /
Synergies
Estimated to achieve low single-digit accretion in year one, growing to double-digit EPS
accretion in the third year post-closing (4)
Leadership Team
Adam Blank, currently chief operating officer and general counsel of Sleepys, will become
president of Sleepys upon closing of the transaction
Estimated Closing
Expected to close during the first half of Mattress Firms fiscal year 2016, subject to
regulatory approvals, including the termination of the applicable HSR waiting period
Estimated annual potential synergies of $40 million by the third year post-closing
(1) Adam Blank will contribute up to $10 million of the equity value he holds in Sleepys in exchange for MFRM shares at a conversion price of
$43.36 per MFRM share
(2) Expected asset step-up is a result of a 754 election and is subject to IRS approval
(3) Represents total consideration less expected present value of asset step-up and additional depreciation and amortization deductions on the
carry-over tax basis
(4) Excluding one-time costs to achieve synergies and acquisition accounting adjustments
Largest Footprint
Market Share
Real estate
#1
Marketing strategy
Product offering
Customer experience
National distribution
Omni-channel
2,420 locations(1)
Sales Growth
($ in millions)
2,420
$2,521
674
674
$494
2010
(1)
(2)
2015 Q3
2010
LTM 15Q3
#1 Northeast Retailer
Market Share
VT
ME
23
8
WI
212
NY
MI
IL
PA
OH
WV
IN
3
KY
21
55
DC
61
4
AL
68
140
45
TN
MS
113
VA
#1
MA
RI
CT
NJ
DE
MD
96
13
107
89
NH
NC
SC
GA
FL
Sales Growth
($ in millions)
$1,135
1,066
$761
694
2010
5
2015 Q3
2010
LTM 2015 Q3
Pro Forma
($ in millions)
Rank
Company
1
Mattress Firm
2
Sleep Number
3
Sleepy's
4
America's Mattress
5
Sit 'n Sleep
6
Innovative Mattress Solutions
7
Mattress Warehouse
8
American Mattress
Top 8 Mattress Specialty Retailers
(1)
(2)
($ in millions)
2014
Stores
2,208
463
1,024
405
32
155
179
95
4,561
Market
2014
YoY
(2)
Sales Growth Share
$1,933
39.4%
13.6%
1,120
21.4%
7.9%
1,085
8.5%
7.6%
326
3.8%
2.3%
114
14.9%
0.8%
102
6.3%
0.7%
100
9.9%
0.7%
68
1.5%
0.5%
$4,848
21.9%
34.1%
Rank
Company
1
Mattress Firm
2
Sleep Number
3
America's Mattress
4
Sit 'n Sleep
5
Innovative Mattress Solutions
6
Mattress Warehouse
7
American Mattress
Top 7 Mattress Specialty Retailers
2014
Stores
3,232
463
405
32
155
179
95
4,561
Market
2014
YoY
(2)
Sales Growth Share
$3,018
26.4%
21.3%
1,120
21.4%
7.9%
326
3.8%
2.3%
114
14.9%
0.8%
102
6.3%
0.7%
100
9.9%
0.7%
68
1.5%
0.5%
$4,848
21.9%
34.1%
Source: Furniture Today Top 100, May 2015. Mattress Firm store count includes franchised locations
Reflects net sales of the respective retailers divided by the estimated size of the U.S. mattress retail market in 2013; Furniture Today
2014 Retail Planning Guide
75
WA
3
MT
39
OR
WI
SD
32
NV
188
28
UT
66
CO
CA
143
AZ
142
IA
NE
26
54
KS
MO
26
19
OK
NM
439
TX
NH
6 NY
MA
CT
12
AR
29
43
36
88
PA
MS
AL
GA
LA
309
FL
HI
Mattress Firm
Mattress Firm
107
MD
OH 3 4 36
IL 89 IN
WV
5
8 37
18
VA
KY
61
NC 125
TN 55
56 4
SC
118
29
14
10
15
MI
17
212
46
Mattress Discounters
Sleepys Only
Mattress King
Note: Includes 125 Mattress Firm franchise locations, as of November 3, 2015. Sleepys store count as of September 30, 2015
ME
VT
MN
ID
ME
33
ND
17
96
RI
13
68
140
NJ
DE
21
38 17
DC
61 52
Stores
LTM Sales
($ in millions)
4,000
$4,000
1,066
3,486
3,000
$3,656
Sleepy's LTM
Q315 Sales
Combined
Company
$3,000
$2,521
2,420
2,000
$2,000
1,000
$1,000
$0
Existing Store
Base
$1,135
Sleepy's Stores
Combined
Company
Note: Store count includes 125 Mattress Firm franchise locations, as of November 3, 2015. Mattress Firm latest twelve months ended November
3, 2015. Sleepys latest twelve months ended September 30, 2015
Revenue
Exclusive Products
Advertising
Strategic Partnerships
Operating Expenses
Accessories
Professional Services
Other
Other
1,066 stores
11 stores
45 stores
314 stores
131 stores
15 stores
Northeast, New
England, Mid-Atlantic,
Midwest
Phoenix, Tucson
California, Hawaii,
Idaho, Nevada and
Washington
Chicago
Orlando
Pittsburgh
Announced
2015
2014
2014
2014
2014
Yotes
Franchise
Perfect Mattress
Franchise
67 stores
55 stores
34 stores
39 stores
Online Retailer
27 stores
Colorado Springs,
Denver, Phoenix,
Tucson
Dallas, Austin
Colorado Springs,
Denver, Wichita
Nationwide
Charleston, Charlotte,
Columbia, Greensboro,
Greenville, Raleigh
2014
2014
2014
2013
2013
2012
Yotes
Franchise
10
40 stores
236 stores
Atlanta, Miami, SW
Florida, Tampa
Atlanta, Minneapolis,
St. Louis | Houston, Dallas,
Jacksonville, Miami, Orlando,
SW Florida, Tampa
2012
2011, 2012
25 stores
36 stores
10 stores
14 stores
Virginia Beach
St. Louis
Las Vegas
2010
2007
2007
2007
Note: Back to Bed includes Bedding Experts and Mattress Barn. Sleep Train includes Sleep Train, Sleep Country, Americas Mattress of
Hawaii and Got Sleep? Excludes acquisitions prior to 2007 and acquisitions of fewer than 10 stores. Dates based on fiscal year acquired
60%
Pre Rebranding
-0.7%
Post Rebranding
+32.7%
40%
25%
Rebranding
completed for
~90% of stores
20%
10%
-20%
11
+7.3%
Post Rebranding
+25.2%
95%
Completed
Rebranding
commenced
70%
Completed
0%
-5%
FY 2014
Pre Rebranding
FY 2015
12
Best-in-Class
Specialty
Retailer
Proven Track
Record of
Driving
Profitability
Highly
Achievable
Growth Plan
Experienced
and Invested
Management
Team