Sheela Foam to buy mattress maker Kurlon for $262 million

India’s Sheela Foam has decided to acquire rival Kurlon for 21.5 billion rupees ($262.09 million). This strategic move aims to increase Sheela Foam’s market presence, capitalize on cost advantages, synergies and improved access to materials.

According to reports, the Kurlon company is known for the famous mattress brand Kurl-on. The acquisition will nearly double the existing market share of the Sheela Foam company, known for its Sleepwell brand. If the deal is successful, Sheela Foam’s market share in the Indian mattress market will soar from 20-25% to 35-40%.

The Sheela Foam Company is a big name in the market with well-known flagship brands such as Sleepwell mattresses, Feather Foam (a pure polyurethane foam) and Lamiflex (a polyester foam for lamination). Interestingly, Sheela Foam’s business is mainly concentrated in the northern and western regions, while Kurlon’s influence extends to the southern and eastern regions.

In addition to potential market expansion, the acquisition brings attractive cost benefits and synergies. The transaction will enable Sheela Foam to purchase more raw material TDI (toluene diisocyanate) at a lower price.

The source explained: “After the transaction is completed, the combined TDI procurement of Sheela Foam and Kurlon will enable the company to obtain substantial discounts. In addition to the advantages in raw material procurement, operational synergies are also expected to be achieved at the plant level, while Optimizing capacity utilization at the production plants of both companies.”

Sheela Foam originally planned to acquire competitor Kurlon in two phases with a high cash consideration of 32.5 billion rupees. Now it has decided to fully acquire the company at a low price of 21.5 billion rupees.

Notably, the deal values ​​Kurlon at just 2.4 times its annual sales, while Sheela Foams is valued at a much higher 3.9 times.