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Sleepwell mattress maker Sheela Foam to acquire Spanish firm Interplasp

By Joseph Rai

  • 26 Jul 2019
Sleepwell mattress maker Sheela Foam to acquire Spanish firm Interplasp
Credit: 123RF.com

Sheela Foam Ltd said on Friday its board has approved a plan to acquire a majority stake in Spanish company Interplasp SL for €42 million ($46.7 million) to expand in Europe.

Sheela Foam, through a unit, will acquire a 93.67% stake while three key managers will continue to hold the balance, the Indian company said in a stock-exchange filing. The company, which sells mattresses under the Sleepwell brand, will have the right of first refusal of these shares.

The acquisition would give Sheela Foam a presence in Europe, the world’s largest polyurethane foam market, the company said.

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Interplasp, which was established in 1987, makes polyurethane foam for bedding, furniture and other applications in Spain and Portugal. The company has a manufacturing facility in Yecla, in Spain, with a capacity to produce 22,000 tons of polyurethane foam. It also markets some of its foam to Morocco.

The Spanish company's turnover rose to €31.6 million last year from €24.1 million and €15.9 million in 2017 and 2016, respectively.

Sheela Foam, which made a blockbuster stock market debut two-and-a-half years ago, has been struggling to accelerate growth for the past few quarters due to tough competition and slow demand.

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The company’s consolidated net sales for 2018-19 increased 9% compared with more than 12% the previous two years. This dragged the compound annual growth rate in sales for the five years through March 2019 to around 11%, according to a VCCircle analysis.  

Earnings before interest, taxes, depreciation and amortisation (EBITDA) and net profit were flat during 2018-19 as margins shrank to four-year lows.

The company's stocks have been trading off the 52 week highs of Rs 1817.95 per share. Its share prices on Friday fell 0.7% to Rs 1272.7 apiece on the BSE Ltd in a flat Mumbai market.

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In India, unorganised players control nearly two-thirds of the country’s mattress market. The organised players besides Sheela Foam, include Duroflex Pvt. Ltd, Kurlon Enterprise Ltd, and Peps Industries.

Earlier in April, Kurlon bought Pune-based Spring Air Bedding Company India Ltd, which markets its products under the brand Spring Air and Englander.

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