Mattress Firm Pops After IPO By J.W. Childs

Company: Mattress Firm Holding Corp.

Sponsors: J.W. Childs Associates, Neuberger Berman Group LLC

Value: $105.5 million in proceeds

Underwriters: Barclays Capital, UBS Investment Bank, and William Blair

Investors flocked to buy shares of specialty retailer Mattress Firm Holding Corp. in its debut on the Nasdaq stock market, bolstering the holdings of its sponsors, J.W. Childs Associates and Neuberger Berman Group LLC.

The company made its debut during the small window of opportunity between the Nov. 4 debut of Groupon Inc. and the Thanksgiving weekend. “The Groupon debut turned a lot of attention to the IPO market and these companies were ready to go if they could, but time is running short for companies that want to list before the end of the year,” said analyst Francis Gaskins.

J.W. Childs acquired Houston-based Mattress Holdings Corp. from Sun Capital Partners in 2007, according to a Moody’s report at the time. The total deal was valued at $450 million (including repayment of existing debt), with a financing package that included a $185 million senior-secured term loan and a $25 million senior-secured revolving credit facility. Since then, Mattress Firm Holding expanded through a series of add-on acquisitions, expanding its geographic reach into 20 states.

Mattress Firm Holding attracted strong investor interest and rose as much as 20 percent on Nasdaq, after pricing its IPO at $19 per share, the high end of its expected range, according to an underwriter. The specialty bedding retailer, which was expecting to price its offering between $17 and $19, sold 5.6 million shares, raising $105.5 million in proceeds. Barclays Capital, UBS Investment Bank, and William Blair acted as underwriters.

“They (Mattress Firm) have a track record of success and increase in sales and earnings, and their after tax margins are consistently 6 or 7 percent which is very good in the specialty retail area,” analyst Gaskins said.

Shares of Mattress Firm Holding closed about 16 percent up at $22 in its first day of trading on Nasdaq. J.W. Childs, which owned 67.7 percent of the company before its IPO, retains a 64.4 percent stake, according to the company’s prospectus. Neuberger Berman had previously owned just less than 13 percent.

(Aman Shah is a correspondent for Reuters in Bangalore; additional reporting by Tanya Agrawal and Steve Bills.)