Fairfax Holdings has agreed to acquire mattress retailer Sleep Country for $1.7 billion.

Toronto-based Fairfax is slated to complete the purchase through a new wholly-owned subsidiary via a plan of arrangement under the Canada Business Corporations Act.

Brampton, Ont.-based Sleep Country has 307 corporate-owned stores and 18 warehouses across Canada. The company operates under the banners; Sleep Country Canada, Dormez-vous, the rest, Endy, Silk & Snow, Hush and Casper Canada.

As a holding company, Fairfax primarily engages in property and casualty insurance and reinsurance and related investment management through subsidiaries.

“We have concluded that this transaction is in the best interests of Sleep Country and is fair to our shareholders,” said Christine Magee, a Sleep Country co-founder and independent shareholder, in a news release.

“Following a comprehensive assessment and our extensive negotiations with Fairfax, we are pleased to have reached an agreement that provides certainty of significant and immediate value to shareholders.”

Magee chaired a special committee of independent directors that oversaw negotiations. Stewart Schaefer, president and CEO of Sleep Country, said the deal clearly demonstrates the value of the company’s brands and organization.

“We look forward to working with [Schaefer] and the entire Sleep Country team to further develop this remarkable Canadian success story over the long term,”: said Prem Watsa, chairman and chief executive of Fairfax, who founded the company in 1985.

If all goes according to plan, Fairfax will acquire all of Sleep Country’s outstanding common stock for $35 per share, and the retailer will be delisted from the Toronto Stock Exchange.

The deal is slated to close in the fourth quarter of 2024, subject to court approval, two-thirds Sleep Country shareholder approval and other customary conditions.

Sleep Country may accept a superior offer in certain circumstances. Fairfax would have a right to match the offer.

Sleep Country has also agreed to pay a $36.5-million termination fee to Fairfax if the deal is scrapped.

Photo: Sleep Country