12:51 PM EDT, 07/23/2024 (MT Newswires) -- Stifel GMP on Tuesday lowered its rating on the shares of Sleep Country Canada Holdings ( SCCAF ) while raising its price target to C$35.00 from C$31.00 after the mattress and bedding company agreed to be acquired by Fairfax Financial (FFH.TO).

"Sleep Country announced this morning a takeover agreement with a subsidiary of Fairfax Financial Holdings Limited for a purchase price of $35.00/share. This is a friendly transaction that has received the support of Sleep Country's Board of Directors and the management team. The transaction, valued at $1.7 billion, represents a valuation multiple of 8.9x Sleep Country's trailing twelve months EBITDA. At first glance, the purchase price appears slightly lower than what we would have expected. Sleep Country's trailing twelve months EBITDA is depressed currently, at $194 million, vs a more normalized level of $215-225 million. Hence, we would have expected the valuation multiple paid to reflect this and be slightly higher. Having said that, we expect that shareholders will support the transaction given the low likelihood of other bidders and certainty of value realization. Hence, we increase our target to $35.00 and change our rating to HOLD.Erratum: the previous version of this note had an incorrect rating in the Financial Summary section of the front page; this has been corrected," analyst Martin Landry wrote.

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Price: 34.80, Change: +0.13, Percent Change: +0.37