Sleep Number files for bankruptcy, will combine with Sleep Country Canada

MINNEAPOLIS — Mattress manufacturer Sleep Number filed for Chapter 11 bankruptcy on Friday and has a deal in place to be acquired by Sleep Country Canada for $415 million.

The Minneapolis-based company filed in U.S. Bankruptcy Court in the Southern District of New York, the Minnesota Star Tribune reported.

Sleep Number secured a “stalking horse” bidder in Sleep Country Canada. The stalking horse sets the bottom price and blocks below-market offers, according to The Wall Street Journal.

Sleep Country Canada’s offer must be approved by the bankruptcy court.

Under the terms of Friday’s deal, Sleep Country Canada created a U.S. subsidiary called SNBR, which is Sleep Number’s ticker symbol, to buy the company, the Star Tribune reported.

Sleep Number said its stores will remain open during regular business hours, and its online site will continue to accept orders while the bankruptcy filings proceed, according to The Wall Street Journal.

In addition to its cash offer, SNBR will assume certain liabilities, according to a filing with the U.S. Securities and Exchange Commission.

“While we have made meaningful progress advancing our turnaround efforts and strengthening our operations, our capital structure remains unsustainable,” Sleep Number CEO Linda Findley said in a statement.

Sleep Country is Canada’s largest mattress retailer with 307 outlets, according to the Star Tribune.

It was taken private in 2024 by Canadian conglomerate Fairfax Financial, The Wall Street Journal reported.

“Our agreement with Sleep Country represents the next step forward in our work to strengthen the foundation of Sleep Number’s business as we continue executing our turnaround strategy,” Sleep Number said in a statement. “We are confident the steps we are taking will enable us to expand our reach, improve our financial position by substantially reducing our debt, and help more people achieve their best sleep.”

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