Mattress Firm Holding said it agreed to buy HMK Mattress Holdings, the owner of mattress retailer Sleepy’s, for about $780 million.
The deal will give Mattress Firm more than 1,050 stores in 17 states in the U.S Northeast, New England, mid-Atlantic and Illinois.
Mattress Firm’s shares were up 7.3% at $53.00 in light trading after the bell on Monday.
Mattress Firm said the combined company will operate about 3,500 stores in 48 states and expects annual cost savings of about $40 million in the third year after the deal closes.
The company also expects annual pro-forma sales of about $3.6 billion.
It expects profit per share to rise at a low single-digit percentage rate in the first year after the deal closes.
Barclays was the financial adviser to Mattress Firm and Morgan Stanley advised Sleepy’s. Norton Rose Fulbright was Mattress Firm’s legal adviser and Sleepy’s was advised by Gibson, Dunn & Crutcher.