Sleepwell maker to buy majority stake in Kurlon for over Rs 2,150 cr

It will also buy 35 per cent stake in Furlenco

Sheela Foam, leading home comfort products and polyurethane (PU) foam manufacturer, will buy a 94.66 per cent stake in Kurlon Enterprises at an equity valuation of Rs 2,150 crore, the company said in a stock exchange filing on Monday.

The company said in a release it would acquire 94.66 per cent for around Rs 2,035 crore, which is subject to customary working capital, debt and debt-like items and other adjustment, if any.

“The indicative time period for the completion of the acquisition is by or before 30th November, 2023,” it said in its release.

It expects to close this acquisition by August 30.

It will also acquire a 35 per cent stake in online furniture firm Furlenco for Rs 300 crore, which is operated by the House of Kieraya, at an equity valuation of Rs 857.14 crore.

“The two brands will be able to do far more justice to the consumer, the channels and the factories, and the distribution,” Rahul Gautam, chairman and managing director, Sheela Foam, told Business Standard.

Gautam said: “Sleepwell has been very strong on the north and the west and Kurlon has been very strong on the south and the east side. So, it gives both the brands equal opportunity to go in the areas which are like developing areas.” He said Sleepwell sold more through exclusive outlets and Kurlon more through multi-brand outlets. And that will help the company.

Kurlon is more a coir-based company and this acquisition gives it an entry into the segment. After the acquisition, the combined entity will have a market share of 35-40 per cent in the organised segment, Gautam said.

In FY22, Kurlon Enterprises had a turnover of Rs 808.80 crore. The company was established in 1962 as Karnataka Coir Products, part of South India-based Pai family business group and is headed by Jyothi Pradhan, Sheela Foam said in its exchange filing.

Sheela Foam said both had many complementary manufacturing facilities, which would help the combined entity to serve customers.

On the Furlenco deal, it said: “The deal will help Sheela Foam to enter the fast-growing branded furniture and furniture rental market, and an opportunity to further diversify its presence even in the furniture sales market and become a full portfolio company in the segment.”