Over the past year or so, South Africa has watched open-mouthed as the Steinhoff empire crumbled.
We’ve seen Markus Jooste’s name dragged through the mud a fair bit – not least when details of his alleged mistress surfaced – and there have already been a few books written about the Steinhoff saga, as it is often dubbed.
There was Steinhoff en die Stellenbosse Boys, written by James-Brent Styan, and now there is Steinheist, penned by Rob Rose.
The Daily Maverick have a chapter from the book on their site. We won’t republish the entire chapter, but let’s get the ball rolling:
What not too many people know is that Steinhoff had been itching to climb into the American mattress market for years. In 2012, Steinhoff had its first stab, when it tried to buy Sealy. But it was beaten by Tempur-Pedic International, which offered $229-million. This time, Steinhoff wasn’t going to risk being beaten.
Mattress Firm had begun life in Houston, Texas, in 1986. But, like Steinhoff, it had grown suspiciously quickly in recent years. In 2014, it bought Sleep Train for $425-million, and the next year it bought the third-largest mattress company in the country, Sleepy’s, for $780-million. So, when Steinhoff came brandishing a weighty cheque, Mattress Firm had an unwieldy, bulging portfolio of 3,500 stores. It was way too many. As one person said:
“I’ve got two Mattress Firm outlets within a mile of each other. I live in a town of 50,000 people [and I] don’t know anyone who has shopped there.
“About three years ago, I told friends and family it had the classic feel of a private equity pump and dump – build the franchise count with cheap banker funding, then find the greater fool to buy the crap.”
Despite the obvious problem with so many stores selling a product that people usually don’t replace for a decade, Steinhoff spent all of five days doing due diligence at Mattress Firm, before deciding to pay double the market price. Critically, had Steinhoff’s team spent a bit longer investigating, they might have stumbled over the reason for the immense surge in Mattress Firm stores: Suspected fraud.
This is laid bare in a jaw-dropping lawsuit that Mattress Firm filed against two of its own executives, dated 30 October 2017, in Harris County in Houston. In that 47-page summons, Mattress Firm accused those two senior executives – Bruce Levy and Ryann Vinson – of taking an epic array of bribes from property developers and brokers that caused the company to sign exorbitant leases it shouldn’t have.
Yeah, and it only gets spicier from there on out.
You can read the chapter in full here.
[source:dailymaverick]
