Sleep Country Canada (ZZZ), a Canadian mattress retailer, announced Tuesday that it has signed a deal to acquire a majority share of Hush Blankets, a direct-to-consumer sleep retailer specializing in weighted blankets, pillows, sheets, and bed-in-a-box mattresses.
As part of the deal, Sleep Country will acquire a 52% stake in Hush for an initial amount of C$25 million.
The company has also agreed to purchase the remaining 48% in annual 16% stake increments starting March 31, 2023, at a price based on the company's financial performance.
Sleep Country Canada president Stewart Schaefer said, "We are impressed by the company's exceptional growth and highly engaged community and look forward to supporting their expansion with our market knowledge, infrastructure and logistics capabilities. Their aggressive and dynamic direct-to-consumer model within Canada and the U.S. perfectly aligns with our growth roadmap as we explore opportunities in new markets with differentiated customer segments."
Founded in 2017 by Lior Ohayon and Aaron Spivak, Hush launched Canada's beloved weighted blanket in 2018. Its Iced Cooling Technology sparked mass interest for new weighted technologies that promote a good night's sleep.
Hush will continue to operate as an independent entity led by Ohayon and Spivak, and a board comprising senior executives from Sleep Country and Hush. Subject to customary closing conditions, the transaction is expected to close on October 22, 2021. (See Insiders' Hot Stocks on TipRanks)
On August 5, National Bank Financial analyst Vishal Shreedhar maintained a Hold rating on ZZZ, and raised its price target to C$39 (from C$38). This implies 12.6% upside potential.
Overall, consensus among Wall Street analysts is that ZZZ is a Moderate Buy based on two Buys and two Holds. The average Sleep Country Canada price target of C$39.25 implies 13.3% upside potential to current levels.
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