Sun Capital abandons £400m sale of beds chain Dreams
The private equity owner of Dreams has scrapped a £400 million sale of the bed retailer after talks with a prospective buyer broke down.
The Press Association understands that Sun Capital Partners pulled the plug on the sale over a disagreement on the mooted shareholding structure.
Sun, which had been working with bankers at Rothschild on the deal, is thought to have wanted to retain 50% ownership of Dreams, but the unidentified buyer had wanted to seize control of the group in its entirety, insiders said.
However, other industry sources cited the asking price as a hindrance to the sale process, alongside a slowdown in consumer confidence that has clouded the outlook for future earnings.
Soaring inflation fuelled by the Brexit-induced collapse in the pound has led to a slowdown in consumer spending and sagging retail sales.
Among the groups that had expressed an early interest in acquiring Dreams were mattress maker Silent Night, South Africa's Steinhoff, Chinese firms MLily and King Koil and a number of US private equity companies.
The news comes amid a flurry of activity in the mattress sector, with Dreams facing stiff competition from online start-ups such as recently listed Eve and rivals Simba and Casper, which make up part of an increasingly crowded space.
But the high street chain has performed well and in March reported a record set of results, with sales rising 20% to £280 million and pre-tax profit growing 136% to £32 million last year.
Dreams linked the growth to investment into store refurbishments and its Oldbury factory, where it manufactures more than 200,000 mattresses and some 160,000 beds annually.
The 181-store chain collapsed into administration in 2013 before being bought by Sun, which has embarked on a successful turnaround in the face of rising online competition under boss Mike Logue.