Fairfax stock positions

[Txvestor]

https://finance.yahoo.com/markets/stocks/articles/andrew-peller-enters-definitive-agreement-110000838.html
 

So Fairfax is buying a Winemaker Andrew Peller at an enterprise value of about 8x EBITDA. About $65M of Fairfax equity being issued for the controlling stakeholders. I assume the rest is in cash. 

May have some synergies with Recipe? 
 

I sure hope this is a better deal than buying back Fairfax shares. I think at the current prices everything needs to be evaluated from that lens. 

[SafetyinNumbers]

14 minutes ago, Txvestor said:

sure hope this is a better deal than buying back Fairfax shares. I think at the current prices everything needs to be evaluated from that lens. 

I continue to think this is a false choice. Equity investments at the insurance subsidiaries level shouldn’t have direct impact on capital allocation decisions at the holdco. They have $4b to dividend up to the holdco from the subsidiaries. My guess is they do half. They also have $400m of Poseidon at the holdco which I assume was also sold. Plus Eurolife proceeds and the 30-year debt raise means the holdco is well capitalized for buybacks even after buying out the Allied World minority interest. 

[SafetyinNumbers]

Eurobank got busy on the buyback again post dividend payout last week.

 

 

[gfp]

27 minutes ago, Txvestor said:

 

https://finance.yahoo.com/markets/stocks/articles/andrew-peller-enters-definitive-agreement-110000838.html
 

So Fairfax is buying a Winemaker Andrew Peller at an enterprise value of about 8x EBITDA. About $65M of Fairfax equity being issued for the controlling stakeholders. I assume the rest is in cash. 

May have some synergies with Recipe? 
 

I sure hope this is a better deal than buying back Fairfax shares. I think at the current prices everything needs to be evaluated from that lens. 

 

Is that right that they are issuing Fairfax stock to the controlling stakeholders?  I didn't see that part.  I read all cash deal.

 

edit:  Oh I see you are probably referencing the equity in the private winemaker the sellers are retaining.  Not the same thing as getting or issuing Fairfax shares

Edited 22 hours ago by gfp

[LC]

29 minutes ago, SafetyinNumbers said:

I continue to think this is a false choice. Equity investments at the insurance subsidiaries level shouldn’t have direct impact on capital allocation decisions at the holdco. They have $4b to dividend up to the holdco from the subsidiaries. My guess is they do half.

 

I don't understand the reasoning here. 

 

Take this Peller deal, if the deal never materialized, wouldn't the insurance subs now have $4b + $400MM to dividend up to holdco? 

[SafetyinNumbers]

39 minutes ago, LC said:

 

I don't understand the reasoning here. 

 

Take this Peller deal, if the deal never materialized, wouldn't the insurance subs now have $4b + $400MM to dividend up to holdco? 

I don’t think so. The dividend capacity is based on what regulators will allow them to dividend out without seeking additional approvals based on excess capital. Selling one equity investment like Poseidon to buy ADW doesn’t change that. 

[Hoodlum]

1 hour ago, gfp said:

 

Is that right that they are issuing Fairfax stock to the controlling stakeholders?  I didn't see that part.  I read all cash deal.

 

edit:  Oh I see you are probably referencing the equity in the private winemaker the sellers are retaining.  Not the same thing as getting or issuing Fairfax shares

maybe I am not reading it correctly but it sounds like John Peller is exchanging his shares for the “purchaser’s” shares.  Wouldn’t that be Fairfax shares?

 

https://ir.andrewpeller.com/news/news-details/2026/Andrew-Peller-Enters-into-Definitive-Agreement-to-be-Acquired-by-Fairfax/default.aspx

 

In connection with the Transaction, John Peller and certain affiliates (collectively, the “Rollover Shareholders”) have entered into an equity rollover agreement with the Purchaser, pursuant to which they have agreed to exchange all 5,246,517 Class A Shares and 1,994,212 Class B Shares beneficially owned and controlled by the Rollover Shareholders (the "Rollover Shares") for shares in the capital of the Purchaser or an affiliate thereof. The Rollover Shares represent approximately 15% of the issued and outstanding Class A Shares and approximately 25% of the issued and outstanding Class B Shares

[SafetyinNumbers]

Just now, Hoodlum said:

maybe I am not reading it correctly but it sounds like John Peller is exchanging his shares for the “purchaser’s” shares.  Wouldn’t that be Fairfax shares?

 

https://ir.andrewpeller.com/news/news-details/2026/Andrew-Peller-Enters-into-Definitive-Agreement-to-be-Acquired-by-Fairfax/default.aspx

 

In connection with the Transaction, John Peller and certain affiliates (collectively, the “Rollover Shareholders”) have entered into an equity rollover agreement with the Purchaser, pursuant to which they have agreed to exchange all 5,246,517 Class A Shares and 1,994,212 Class B Shares beneficially owned and controlled by the Rollover Shareholders (the "Rollover Shares") for shares in the capital of the Purchaser or an affiliate thereof. The Rollover Shares represent approximately 15% of the issued and outstanding Class A Shares and approximately 25% of the issued and outstanding Class B Shares

No, the purchaser is a new subsidiary that has been created to acquire the company.

[Txvestor]

1 hour ago, SafetyinNumbers said:

Eurobank got busy on the buyback again post dividend payout last week.

 

 

With all due respect, those are really miniscule numbers given their market cap in the range of $15B. €6.5M is less than 0.05% over 3mths. 

[Txvestor]

4 minutes ago, Hoodlum said:

maybe I am not reading it correctly but it sounds like John Peller is exchanging his shares for the “purchaser’s” shares.  Wouldn’t that be Fairfax shares?

 

https://ir.andrewpeller.com/news/news-details/2026/Andrew-Peller-Enters-into-Definitive-Agreement-to-be-Acquired-by-Fairfax/default.aspx

 

In connection with the Transaction, John Peller and certain affiliates (collectively, the “Rollover Shareholders”) have entered into an equity rollover agreement with the Purchaser, pursuant to which they have agreed to exchange all 5,246,517 Class A Shares and 1,994,212 Class B Shares beneficially owned and controlled by the Rollover Shareholders (the "Rollover Shares") for shares in the capital of the Purchaser or an affiliate thereof. The Rollover Shares represent approximately 15% of the issued and outstanding Class A Shares and approximately 25% of the issued and outstanding Class B Shares

Yes thats what I read it to be. And how I arrived  at ~$65M. Ie 5.2M x $8 and 2M x $12. Everyone else gets cash. 

[SafetyinNumbers]

Just now, jbwent63 said:

That was going to be my point. They will own a minority stake in the company directly, not via shares of FFH. this allows the shareholders to defer the capital gain they would otherwise have to recognize on the disposition of their Peller shares.

Also gives Fairfax partners who know the company best that have skin in the game. 

[Txvestor]

9 minutes ago, SafetyinNumbers said:

No, the purchaser is a new subsidiary that has been created to acquire the company.

Yes looks like you're right here. The Andrew Peller release is more clear on this. And I agree it's a good thing as the managers have skin in the game. 
 

"Andrew Peller Limited (“Andrew Peller” or the “Company”) (ADW.A / ADW.B) announced today that it has entered into a definitive arrangement agreement (the “Arrangement Agreement”) with a newly-formed and wholly-owned subsidiary (the “Purchaser”) of Fairfax Financial Holdings Limited (“Fairfax”), and Fairfax, as guarantor, in respect of a transaction (the “Transaction”) whereby the Purchaser will acquire all of the issued and outstanding Class A Non-Voting shares (the “Class A Shares”) and Class B Voting shares (the “Class B Shares”) of the Company (other than the Rollover Shares (as defined below))"

 

[mananainvesting]

Andrew Peller owns a good property that they have been wanting to develop to sell.
 

Edited 20 hours ago by mananainvesting

[mananainvesting]

[Viking]

Here is the link to a good overview of Peller Estates. 

 

https://s201.q4cdn.com/211846765/files/doc_presentations/2026/APL-Investor-Presentation-Q3-26-FINAL.pdf

 

The reported purchase price can be misleading... Part of the purchase price will likely be funded with an increase in debt at Peller Estates. 

 

The key is how much $ is Fairfax contributing. And what will that investment earn over time? 

 

The big question for me is: How good is the management team at Peller Estates?

 

There are lots of interesting angles to this deal: 

• Real estate portfolio and inventory = C$500M 
• Recipe/Keg - this will work both ways... restaurant competitors might not like it.
• This is a long term business - much better fit as a private company.
• The sector (alcohol) is pretty out of favour. 

From an income stream perspective, another addition to the consolidated bucket for Fairfax.

Edited 19 hours ago by Viking

[Txvestor]

1 hour ago, mananainvesting said:

Andrew Peller owns a good property that they have been wanting to develop to sell.
 

Perhaps KW can find something good to do with it. I of course don't know anything about the BC real estate market, but it certainly strikes me as a valuable piece of real estate in the right hands. KW has a presence in the Pacific Northwest so might not be too much of a leap. 

[Hsmpanl]

2 hours ago, Txvestor said:

With all due respect, those are really miniscule numbers given their market cap in the range of $15B. €6.5M is less than 0.05% over 3mths. 

I think this is over 3 days... Europeans report the day and month backwards right?

[gfp]

53 minutes ago, Hsmpanl said:

I think this is over 3 days... Europeans report the day and month backwards right?

 

yes it is three trading days of repurchase activity

[Txvestor]

1 hour ago, Hsmpanl said:

I think this is over 3 days... Europeans report the day and month backwards right?

 Lol. Or we do, either way, makes more sense. 

Edited 17 hours ago by Txvestor

[jbwent63]

Has there ever been any disclosure by Fairfax of ownership of Peller shares prior to the announcement of the takeover? I don't see any mention of it in the press release.

 

[SafetyinNumbers]

3 hours ago, Txvestor said:

With all due respect, those are really miniscule numbers given their market cap in the range of $15B. €6.5M is less than 0.05% over 3mths. 

Three days as you guys noted but they actually picked up the pace a bit. Their target is 50% of 2025 income in capital return. They paid a dividend of a little over 7 eurocents last week.They plan to spend up to €280m over the next year on the buyback based on the press release. It makes sense for them to be more aggressive at lower prices and it seems like they are. 

 

[nwoodman]

On 6/14/2026 at 11:20 AM, anshulp said:

 

So Sleep Country Canada (Fairfax) is likely to end up with this business.

I don't fully know how C11 works but I think Sleep Country Canada gets the whole operating business then for $415m in cash.  EBITDA for this year is estimated to be 80m, and 105m for '27 putting it at 5x '26 and sub 4x '27. 

I read they bought over $700m of stock at $100 a share which is crazy. What a waste of money.

 

Great post, and I think you are broadly right, but I would be slightly careful with the “$415m / 5x / sub-4x” framing.

 

The $415m is the disclosed cash purchase price. It is not necessarily the full economic cost to Sleep Country. Through the Chapter 11 sale, Sleep Country is buying all of the operating assets, but it will also assume certain operating liabilities and selected contracts/leases. So the real economic cost is probably higher than $415m, although still materially lower than the old enterprise value, because the funded debt and unwanted liabilities should largely be left behind.

 

That aside, I appreciated your post because it piqued my interest enough to put a few tokens in the jukebox, so to speak. File note and workbook attached.

Where I landed (after crunching various LLMs etc)

• Disclosed cash purchase price - $415m
• Analyst-estimated effective cost - $500–600m
• Stress-case effective cost - $650–700m

 

The $500–600m range is not a disclosed number. It is my attempt to account for selected operating liabilities, working-capital leakage, customer obligations, cure costs and initial integration / restructuring. The $650–700m range is more of a stress case if the leakage, assumed lease burden, or cure costs are worse than expected.

 

Where I agree with you is that this looks potentially very attractive if Sleep Country can restore buyer-owned EBITDA to something like $110m+. Sleep Number did about $78m adjusted EBITDA in FY2025, down from about $120m in FY2024, and Q1 2026 was ugly. But Q1 was distorted by weak demand, product transition, liquidity stress and operating deleverage. I do not think annualising Q1 tells you the normalised value of the asset.

The more useful question, and the thing I really care about, is whether Fairfax / Sleep Country are maintaining capital allocation discipline. To that end, I tried to answer:

What EBITDA does Sleep Country need for this to clear Fairfax’s 15% hurdle?

At around $550m effective cost, assuming roughly 55% FCF conversion and a 6x year-five value, I get required buyer-owned EBITDA of roughly $114m to clear a 15% mark-to-market IRR. That is not the same as saying the business immediately earns a 15% cash yield. The strict no-growth cash-yield test is tougher and requires EBITDA closer to $150m at the same cost / FCF conversion assumptions. But on a five-year mark-to-market basis, $114m looks like the key hurdle number.

That is important because it does not require a heroic demand recovery. It mostly requires cost-side execution:

• public-company cost removal;
• duplicated overhead reduction;
• store / lease optimisation;
• procurement and logistics efficiencies;
• some marketing efficiency.

So can Sleep Country take a distressed $78m EBITDA platform and create roughly $35–40m of buyer-specific EBITDA improvement?

That seems plausible to me, especially because this deal likely only makes sense under Sleep Country. A generic PE buyer probably does not get the same strategic benefits. Sleep Country already has category knowledge, vendor relationships, retail operating experience, digital sleep-brand experience and Fairfax permanent capital behind it.

Sleep Number is also not just a mattress-store chain. It has a recognised U.S. brand, installed customer base, smart-bed IP, SleepIQ software/data, app engagement, patents and a large U.S. footprint. I would not value that at some fantasy health-tech multiple, but I would not ignore it either. Inside Sleep Country, those assets may be worth more than they were inside an overlevered public company.

 

On the buybacks, I wholeheartedly agree. The historic capital allocation looks terrible in hindsight. Buying hundreds of millions of stock at very high prices while the balance sheet later collapses is exactly the sort of thing that transfers value from old equity to future distressed buyers. Painful for SNBR shareholders, but potentially attractive for Fairfax / Sleep Country.

 

Is this a game-changer for Fairfax? No. But it is another useful data point that Fairfax-owned subsidiaries are doing the kind of acquisitions one would hope for at this stage of the market: buying real assets from forced sellers, using industry knowledge, avoiding the obvious crowded trades, and still appearing to underwrite against a reasonable return hurdle.

 

There is also a management/culture option here. Stewart Schaefer has already shown he can build Sleep Country beyond a plain mattress retailer through Endy, Hush, Silk & Snow and Casper Canada. And the broader Sleep Country culture traces back to Christine Magee and the founding team, who built one of Canada’s best-known specialty retail brands. If that operating culture can now be applied to Sleep Number’s U.S. brand, IP, customer base and footprint under a cleaner balance sheet, Fairfax may have bought more than a cheap distressed asset, it may have bought an option on a much larger North American sleep platform.

So my read is:

• Bad outcome for old Sleep Number equity.
• Probably an acceptable outcome for creditors versus liquidation.
• Potentially good bolt-on for Sleep Country if effective cost is around $500–600m and buyer-owned EBITDA gets back above ~$110m.
• Very good deal if EBITDA gets to $140m+.

Much more marginal if EBITDA stalls around $80–100m or if assumed lease/cure costs are worse than expected.

The bigger Fairfax point is that this may actually make the original Sleep Country acquisition look better. Sleep Country is not just a mature Canadian mattress retailer; it can become a platform for distressed North American sleep-sector consolidation. This is exactly the kind of sub-level capital allocation that matters over time. Ultimately, my takeaway is that the deal only really makes sense under the Sleep Country umbrella. That is not a weakness. That may be the whole point.  There are far shinier things at the moment than mattresses, but the GMs on a humble mattress I still find quite staggering   

 

 

Sleep Number Analysis.xlsx Sleep Number Analysis.pdf

[Hoodlum]

The Kennedy-Wilson take-private transactions was completed.

 

https://www.fairfax.ca/press-releases/fairfax-announces-completion-of-kennedy-wilson-take-private-transaction/

 

In addition, an affiliate of the Consortium (the “Borrower”) entered into a Term Loan Credit Agreement (the “Credit Agreement”) pursuant to which it obtained a three-year US$1.3 billion term loan facility. In connection with the Credit Agreement, Fairfax agreed to provide a stand-by guarantee pursuant to which Fairfax would agree, upon the occurrence of certain events under the Credit Agreement, to guarantee in favour of the lenders the obligations of the Borrower under the Credit Agreement.