ATLANTA–Ares Management and Teachers’ Private Capital—the owners of National Bedding Co., producer of Serta branded mattresses—have struck a deal with Simmons to acquire the nation’s second largest mattress manufacturer.
The purchase price is $760 million, according to a joint statement issued by Simmons and the two private equity firms, and the acquisition is part of a restructuring plan for Simmons’ debt obligations. The statement added that Simmons intends to file for Chapter 11 bankruptcy protection after it completes a 30-day process of soliciting votes for the restructuring plan from its senior bank lenders and holders of its senior subordinated notes and discount notes. Once the company files for Chapter 11, it will seek U.S. bankruptcy court’s confirmation of the prepackaged restructuring plan.
The statement also said Ares and Teachers’ will operate Simmons and Serta as “separate and distinct entities that will continue to compete with one another in the market.” The two companies will maintain their separate product lines, management teams and corporate identities. Ares senior partner Bennett Rosenthal said keeping Simmons and Serta separate enhances the former’s strengths in brand name and products.
The restructuring plan will also reduce Simmons’ total indebtedness from about $1 billion to about $450 million. Noting that the plan will permit Simmons to keep its identity and operational structure, Steve Fendrich, the company’s president and chief operating officer, added that the plan will bring “a newly strengthened balance sheet” that will allow Simmons to move forward with product development and innovation.
Ares and Teachers’ purchased National Bedding, which produces Serta mattresses, in 2005. A statement issued by Serta management this morning said the company is focused on a “business-as-usual” approach to its own operations, and that the transaction should result in no changes to Serta’s overall business.