Australia's competition watchdog has allowed the acquisition of two foam manufacturers, after its investigation found the sales will not reduce competition in the nation's polyurethane foam market.
The Canberra-based Australian Competition and Consumer Commission said it will not oppose deals between Brisbane-based Wonderest Ltd., trading as Sleepyhead Manufacturing Ltd., and Melbourne-based Pacific Brands Holdings Pty. Ltd.
In November, Pacific Brands said it had entered into an agreement to sell two of its business units, Dunlop Foams and Sleepmaker, to Sleepyhead for US$55 million. At the same time, Pacific Brands said it proposed buying Sleepyhead's Australian carpet underlay business, Wonderlay Ltd., for a nominal amount.
In a January preliminary statement, ACCC said Sleepyhead's proposed acquisition of Dunlop Foams was likely to lessen competition substantially in the PU foam market. While it has now agreed the sales can go ahead, the regulator has not disclosed why it changed its mind, but said a statement will be released in due course.
Pacific Brands said the sales are expected to be finalized by March 31.
Sleepmaker is a bedding manufacturer and Dunlop Foams makes PU foam. Pacific Brands also owns a PU underlay manufacturing business unit, Dunlop Flooring, which is not part of the deal.
Bedding and carpet underlay manufacturer Sleepyhead produces the PU foam used in its products.
In assessing the sales under Australia's Competition and Consumer Act 2010, ACCC was required to determine whether the acquisitions were likely to substantially lessen competition in the market.
Sleepyhead said the Sleepmaker and Dunlop Foams brands will be added to the company's existing brands.
Craig Turner, Sleepyhead's joint managing director, said the company's growth through expansion is an integral part of its philosophy.
The acquisition will be of tremendous benefit to key stakeholders in Australia and New Zealand, including employees, customers and suppliers, he said.