Sheela Foam Ltd. said on July 19 that its board of directors has approved plans to acquire a majority stake in Spanish company Interplasp SL for 42 million euros ($ 46.7 million) to expand its European operations.
In a filing on the stock exchange, Sheela Foam stated that Sheela Foam will receive 93.67% of the shares as a whole, while the remaining shares will continue to be held by the three main managers of the original company. The company's mattresses are sold under the Sleepwell brand.
The company said that the acquisition puts Sheela Foam on the stage in Europe, the world's largest polyurethane foam market.
Interplasp was founded in 1987 to produce polyurethane foam for bedding, furniture and other applications in Spain and Portugal. The company has a production facility in Yecla, Spain, which produces 22,000 tons of polyurethane foam. It also sold part of the bubble to Morocco.
The Spanish company had a turnover of 15.9 million euros in 2016, increased to 24.1 million euros in 2017, and reached 31.6 million euros last year.
Sheela Foam made its debut in the stock market two and a half years ago. Due to fierce competition and slowing demand, growth has been slow in the past few quarters.
The company's consolidated net sales growth for 2018-19 was 9%, compared to more than 12% in the previous two years. According to aVCCircle's analysis, by March 2019, Sheela Foam's five-year compound annual growth rate has reached about 11%.
With profit margins shrinking to their lowest point in four years, EBIT and net profit remained flat in 2018-19.
The company's stock has moved off its 52-week high of Rs 1817.95 per share. Its shares fell 0.7% on Friday to Rs 1272.7. At the same time, the Mumbai market was generally flat.
In India, retail investors control almost two-thirds of the country's mattress market. In addition to Sheela Foam, large companies include DuroflexPvt Ltd., Kurlon Ltd. and PEPS Industrial.
In early April, Kurlon acquired Spring Air Bedding India based in Pune. The company's products are sold under the Spring Air and Englander brands.