Sheela Foam Ltd on Monday said its board had approved two acquisitions involving a 94.6% stake in Kurlon Enterprise Limited (KEL) and a 35% stake in Furlenco owner House of Kieraya Pvt Ltd. It is acquiring 94.66% of KEL at an equity valuation of ₹2150 crore, subject to customary adjustments for working capital, debt and surplus cash, Sheela Foam said.
The company added separately that it is acquiring a 35% stake in Furlenco for a cash consideration of around ₹300 crore. Mint reported on 8 February that Sheela Foam was looking to acquire Furlenco.
On Kurlon, Sheela Foam said the acquisition is expected to be completed on or before November 30, 2023. The acquisition of Kurlon will help consolidate the existing fragmented market of mattresses and foam based products. It will further diversify Sheela Foam’s existing customer base into Southern and Eastern regions of India. With this acquisition, It expects it will have a combined market share of around 21% in the mattress market in India.
It is expected to provide Sheela Foram with a robust distribution network and production efficiencies and cost savings, it said in a note to the exchanges.
Kurlon was established in 1962 and reported revenues of ₹808.80 crore in FY22, up from FY21 when it reported ₹767.25 crore in revenue, but down from FY20 when its revenue stood at ₹995.56 crore. Kurlon has not yet declared its FY23 financial numbers. It makes products like mattress, furniture, cushions, pillows and coverings.
“With the coming together of Kurlon, 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. 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,” Rahul Gautam, Chairman & Managing Director, Sheela Foam said.
On Furlenco, Sheela Foam said the investment will help the company enter the ‘fast growing branded furniture market”. Furlenco is being valued at around Rs. 857.14 crs. Furlenco has a strong online presence and operates in Bangalore, Mumbai and Delhi NCR. The acquisition of a stake in Furlenco is expected to close by August 31, 2023.
Sheela Foam previously acquired Joyce Foam in Australia with 5 manufacturing plants in 2003 and Comfort Technologies in Spain in 2019.