Sheela Foam to acquire 94.66% stake in Kurlon Enterprises for Rs 2,150 crore

Sheela Foam Ltd, the maker of popular mattress brand Sleepwell, on Monday said it will acquire a 94.66 per cent stake in Kurlon Enterprises Ltd for Rs 2,150 crore.

The company also said it will acquire a 35 per cent stake in online furniture firm House of Kieraya Pvt Ltd for Rs 300 crore.

The company's board at its meeting held on July 17, 2023, has approved the acquisition of Kurlon Enterprise Ltd and House of Kieraya Pvt Ltd, Sheela Foam said in a regulatory filing.

"The company is acquiring 94.66 per cent of KEL's (Kurlon Enterprises Ltd ) share capital at an equity valuation of Rs 2,150 crore, subject to customary adjustments for net working capital, debt and surplus cash, if any," it said.

KEL deals mainly in the manufacture and marketing of foam and coir-based home comfort products across the 'sit and sleep' categories like mattresses, furniture cushions, pillows and coverings.

It was established in 1962 as Karnataka Coir Products, part of South India-based Pai family business group, and is currently headed by Jyothi Pradhan, the filing added.

The entity was renamed as Kurlon Ltd in 1995. KEL was set up as a subsidiary in 2011 by Kurlon Limited. Subsequently, the business was transferred to KEL in 2014.

"The acquisition will help the company to consolidate the existing fragmented market of mattresses and foam-based products," Sheela Foam said.

It will also help diversify the customer base as the company is the leader in northern and western India whereas KEL has strengths in southern and eastern regions of India. This acquisition will help in extending a pan-India footprint, it added.

KEL had a turnover of Rs 767.25 crore in FY 2020-21 and Rs 808.80 crore in FY 2021-22.

Sheela Foam further said it would acquire a 35 per cent stake in House of Kieraya Pvt Ltd that runs online furniture business Furlenco, for Rs 300 crore, subject to customary working capital and other adjustments.

"The acquisition will help the company enter the fast growing branded furniture market," Sheela Foam said.

Furlenco has a strong online presence and operates in cities, including Bangalore, Mumbai and Delhi NCR. It had clocked a turnover of Rs 129 crore in FY22 and Rs 152 crore in FY23.