Toronto Firms Eye Sleep Country For $356M

August 16, 2008 1:07 p.m. EST

Toronto, Ontario (AHN) - Two Toronto-based investment firms, Birch Hill Equity Partners Management Inc. and Westerkirk Capital Inc., offered to buy Canada's biggest mattress retailer, Sleep Country Canada Income Fund, for $356 million.

The friendly takeover bid by the private equity firms, a first co-investment partnership for Birch Hill and Westerkirk, involves an offer of $22 in cash for every Sleep Country unit. The board of Sleep Country has advised unit holders to accept the offer.

For the takeover to proceed, the two firms need two thirds of the units being tendered. Transaction is expected to be completed by September 23 but another buyer may bid a counter offer.

Sleep Country co-founder Christine Magee will stay as president as well as chairman and CEO Stephen Gunn. Gunn is also a member of Westerkirk's advisory board.

Sleep Country unit value decreased by a third of its value this year due to a weakening housing and home improvement market.

TD Asset Management is the largest holder of Sleep Country at over 25 percent of the outstanding units.

Sleep Country has 160 branches in Canada wherein 27 stores are in Quebec under the name Dormez-vous Sleep Centres. It also has 26 stores in Arizona.