09:04 AM EDT, 07/23/2024 (MT Newswires) -- Analysts at RBC Capital Markets and TD Securities said the takeover price for Sleep Country Canada Holdings Inc. ( SCCAF ) is reasonable.

A subsidiary of Fairfax Financial Holdings Ltd. ( FRFHF ) is acquiring the Canadian mattress and bedding retailer for $35 per share in cash.

"On balance, we see the proposed acquisition as an affirmation of the brand's strong market position as Canada's leading mattress retailer with a diversified omni-channel approach," RBC analyst Tom Callaghan said in a note to clients.

"We believe the path to closing is supported by the unanimous support from the board, the all-cash nature of the bid from a credible buyer (which is not subject to any financing conditions), and what we deem to be a reasonable takeout valuation," Callaghan said.

The analyst raised his price target on Sleep Country to $35 from $30 and maintained a Sector Perform rating.

TD analyst Brian Morrison said Sleep Country is compelling due to its "attractive free cash flow, solid balance sheet and dominant market share in the Canadian mattress industry."

"We thought investors would benefit from improved earnings growth/multiple expansion upon an industry rebound, or that it was positioned as a pre-packaged leveraged buyout," Morrisons said in a note to clients.

"We believe the Fairfax offer of $35 per share is fair in the context of the current outlook," the analyst said.

He downgraded Sleep Country to Sell from Buy and raised his price target to $35 from $33.

(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)