updated 2:41 PM EDT, Wed October 10, 2012
Specialty sleep maker Tempur-Pedic, with headquarters in Lexington, Ky., is acquiring mattress industry major Sealy, based in Trinity, N.C. The combined company is valued at $2.7 billion, making it the largest bedding company in the world.
The purchase is valued at $1.3 billion, which includes about $750 million in debt held by Sealy that Tempur-Pedic will assume or repay. The transaction is expected to close during the first half of 2013.
The boards of directors of both companies have approved the deal. Shareholders of about 51% of Sealy stock have consented to the deal and no other shareholders are required for completion of the transaction, according to the companies. Tempur-Pedic will purchase all outstanding Sealy stock for $2.20 per share.
Tempur-Pedic said the two companies will continue to operate independently. Larry Rogers, Sealy chief executive officer, will remain in his position and report to Tempur-Pedic Chief Executive Officer Mark Sarvary. Rogers had announced last year that he would be retiring.
“This is a transformational deal that brings together two great companies, each with globally recognized brands,” Sarvary said. “Tempur-Pedic and Sealy together will have products for almost every consumer preference and price point, distribution through all key channels, in-house expertise on most key bedding technologies, and a world-class research and development team. In addition, our global footprint will span over 80 countries. The shared know-how and improved efficiencies of the combined company will result in tremendous value for our consumers, retailers and shareholders.”
Rogers said of the deal, “The complementary product and market fit of these two companies deliver a unique opportunity to create the first full spectrum, global bedding company that addresses all market segments and consumer preferences. Together, we believe that we can deliver more value than either business could on its own by leveraging our strong combined assets.”
Tempur-Pedic was founded in 1992. It manufactures, markets and distributes mattresses and pillows made of its proprietary visco-elastic Tempur foam. Sealy, founded in 1881, built its business on innerspring mattresses and has a portfolio that includes the Sealy, Sealy Posturepedic and Stearns & Foster brands, as well as newer foam offerings such as Optimum by Sealy Posturepedic.
Until this year, Sealy had reigned for four decades as the largest mattress maker in the United States. It was unseated by competitor Serta, according to an annual list of the largest U.S. mattress makers compiled by Furniture/Today. Tempur-Pedic was No. 4 on the 2012 Furniture/Today list.
Sealy was acquired by private equity firm KKR & Co. in 2004. It went public two years later, with KKR retaining a 44% ownership stake in the company. Tempur-Pedic was bought by equity firm TA Associates Inc. and Friedman Fleischer & Lowe in 2002 and then taken public in 2003.