Linda Findley, President and Chief Executive Officer of Sleep Number, said the company's "capital structure remains unsustainable" despite progress on its turnaround, and that "moving forward with the Sleep Country Canada agreement and this court-supervised sale process will enable us to address our financial constraints," while also positioning the business "to expand," including through "future international expansion." Stewart Schaefer, President and Chief Executive Officer of Sleep Country Canada, said the companies have "long admired Sleep Number, its game-changing personalized sleep products and the talented team behind them," and that together they see "a tremendous opportunity to build on our complementary strengths and accelerate growth across the United States while introducing Sleep Number's innovative sleep solutions to consumers in Canada and other markets."
Following a Bankruptcy Court-supervised auction process, Sleep Number entered into an Amended and Restated Asset Purchase Agreement with the purchaser and Sleep Country Canada on July 18, 2026 (disclosed in an 8-K filed July 23, 2026), which increased the base cash purchase price from $415.0 million to $529.5 million, subject to certain purchase price adjustments. The amended agreement also reduced the purchaser's required adjustment escrow deposit from $25.0 million to $10.0 million, eliminated or narrowed several potential purchase-price deductions (including those tied to undelivered customer orders, payment-card processor reserve deposits, and cure costs for assumed contracts and leases), removed certain pre-closing covenants and closing conditions (including a minimum marketing spend covenant, a pre-closing inventory count, and minimum employee/executive acceptance thresholds), and added a new closing condition requiring Sleep Number to fund a segregated Stub Rent Reserve of $5,193,168 for unpaid lease obligations. Closing conditions disclosed in that filing included entry of a Bankruptcy Court sale order, expiration or termination of the Hart-Scott-Rodino antitrust waiting period, absence of FTC or DOJ antitrust action to block the sale, and the absence of a material adverse effect at Sleep Number. The amended agreement also provided for a break-up fee and expense reimbursement payable to the purchaser, and forfeiture of a deposit to the company, in certain circumstances, though the specific dollar amounts of those fees were not disclosed in the 8-K.
The transaction has closed. The Bankruptcy Court entered a Sale Order on July 21, 2026 approving the amended purchase agreement and authorizing the debtors to consummate the sale, and the parties closed the Asset Sale on July 31, 2026, per an 8-K filed August 3, 2026. Total cash proceeds were $529.5 million, of which approximately $267.4 million was used to repay debtor-in-possession term loans and roll-up loans provided by the company's prepetition lenders (together with certain other fees and expenses), and $10.0 million was deposited into an escrow account to settle post-closing purchase price adjustments. Sleep Number stated it does not expect any proceeds from the Asset Sale, or from the ultimate settlement of claims under its plan of liquidation, to be available for distribution to stockholders, and that the company's outstanding common stock will be cancelled upon effectiveness of the plan. The company also disclosed that it was unable to prepare pro forma financial information for the transaction without unreasonable effort or expense and that none was included in the closing 8-K; as a debtor-in-possession, it instead files monthly operating reports with the Bankruptcy Court that are limited in scope and not intended as a basis for investment decisions.
No earnings or EBITDA multiple was disclosed for the transaction in any available filing, consistent with its structure as a cash asset sale out of bankruptcy rather than a valuation-driven strategic or going-concern acquisition. Sleep Number was advised by Davis Polk & Wardwell LLP as lead legal advisor, Guggenheim Securities, LLC as investment banker, AP Services (an affiliate of AlixPartners) as interim management, and Joele Frank, Wilkinson Brimmer Katcher as strategic communications advisor; A&G Real Estate Partners assisted with store footprint matters. Sleep Country Canada was advised by Goodwin Procter LLP as lead legal advisor and PwC as financial advisor. In connection with the June 2026 filing, Sleep Number also disclosed it expected to secure up to $260 million of debtor-in-possession financing, including up to $65 million in new financing, to fund operations during the court-supervised process.