Birch Hill, Westerkirk bid C$356m for mattress retailer

The Canadian private equity firms have offered C$22 per share for Sleep Country Canada, a 37 percent premium over yesterday's closing price. It is the first deal in which the Toronto-based firms have partnered, and if approved by shareholders should close in September.

Canadian private equity firms Birch Hill Equity Partners and Westerkirk Capital have partnered to acquire mattress retailer Sleep Country Canada for C$356 million ($334 million, €226 million).

The Toronto-based firms will pay C$22 per share to de-list the company, a 37 percent premium over yesterday’s closing price. The company's board of trustees has endorsed the transaction.

“We’re very excited about the management team and we liked its growth prospects,” Birch Hill chief operating officer Pierre Schuurmans told PEO. If approved by shareholders, the transaction is slated to close on 23 September.

Sleep Country owns 160 stores throughout Canada, including 27 under the Dormez-vous Sleep Centres banner in Quebec. The company, listed on the Toronto Stock Exchange, also operates 46 stores in the United States.

Sleep Country chief executive Stephen Gunn will retain his role with the company should the take-private prove successful. Gunn currently sits on Westerkirk’s advisory board.

Schuurmans declined to comment on whether the deal originated from Westerkirk.

Middle market specialist Birch Hill is currently investing its third fund, which closed on C$850 million in August 2005. The firm, which in 1994 spun out of the private equity wing of TD Bank Financial Group, manages roughly C$1.7 billion in capital and typically targets companies valued between C$30 and C$250 million. The firm is best known for its ownership of local ice hockey and basketball clubs, the Toronto Maple Leafs and the Toronto Raptors.

Westerkirk, which invests on behalf of only one limited partner, typically commits between C$15 and C$40 million in transactions. The firm touts itself as a uniquely long-term investor, with a targeted time horizon of 10 to 20 years. Managing director Peter Winters served as vice president of TD Capital before joining Westerkirk.  

This is the first time Birch Hill and Westerkirk have partnered on a deal.