There is no bouncing back from Mattress Firm’s debt nightmare
Steinhoff’s decision to pay a 115% premium to buy Mattress Firm in 2016 might well join Hewlett Packard-Autonomy and Microsoft-Nokia in the annals of the world’s worst acquisitions
Just two years after Steinhoff International paid a whopping $3.8bn to acquire Mattress Firm, its US bedding subsidiary has filed for bankruptcy. Steinhoff, the local retailer that is itself struggling for survival after a massive accounting scandal, had already booked more than €1.6bn of impairments in relation to Mattress Firm before Friday’s Chapter 11 filing. Now, Steinhoff will be forced to surrender half of the US store chain’s equity in return for $525m of financing provided by Steinhoff bondholders. Another goodwill write-down looks likely. Mattress Firm’s balance sheet, published on Friday, shows its liabilities exceeding its assets by $1bn. The company had run out of options, having burnt through about $500m of cash in three years. A Mattress Firm holding company was on the hook for $3.2bn of Steinhoff intra-group loans. Steinhoff’s inexplicable decision to pay a 115% premium to acquire Mattress Firm in 2016 might well join Hewlett Packard-Autonomy and Microsoft-Nokia in t...
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