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Highlights
- Sleep Country Canada would acquire a 52 per cent stake in Hush Blankets and the deal is valued at C$ 25 million.
- The deal is important for Sleep Country as Hush has emerged as one of the leading sleep improvement brands.
- The Sleep Country (ZZZ) stock had a relative growth of 30 per cent year-to-date (YTD) and outperformed the Toronto Stock Exchange 300 Composite Index
Stocks of Sleep Country Canada Holdings Inc. (TSX:ZZZ) jumped around one per cent at market open on Tuesday, October 19, as the company announced that it has agreed to buy Hush Blankets, a company that is a direct-to-consumer seller of mattresses, weighted blankets, sheets and pillows.
If and when the deal is through, Sleep Country Canada would acquire a 52 per cent stake in Hush Blankets and the deal is valued at C$ 25 million. In addition, the Brampton-based company has said that it will buy the remaining 48% in annual 16%-point stake increments from March 2023.
Hush will continue to operate as an independent business and the deal will likely be completed in October 2022.
The deal is important for Sleep Country as Hush has emerged as one of the leading sleep improvement brands within no time. The company was started in 2018 with a product now considered to be Canada's best- a weighted blanket. This product helps people with sleep, anxiety, and insomnia issues.
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With the first 24 months since its inception, Hush became an eight-figure brand, and the company expanded its product line to include sleep accessories and mattresses.
Is Sleep Country (TSX:ZZZ) stock a buy?
The ZZZ stock had a relative growth of 30 per cent year-to-date (YTD) and surpassed the Toronto Stock Exchange 300 Composite Index’s growth of eight per cent. Meanwhile, the ZZZ stock catapulted by about 50 per cent in the last 12 months.
Sleep Country recently partnered with Walmart Canada and launched new 'Sleep Country Express' and 'Dormez-vous Express' stores in the licensee spaces of Walmart Canada.
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The expansion plans of the company could increase its customer base and take it to new heights. If Sleep Country records a continuous increase in its revenues and free cash flows, the company could further go on an acquisition spree to get more market share.
Bottom line
In the second quarter of 2021, Sleep Country posted strong financial results as its revenues increased to C$ 192.2 million, representing an increase of 67.3 per cent year-over-year (YoY).
The company's net income increased by C$ 17.5 million compared to a net loss of C$ 0.5 million in Q2 2020.
