Tempur-Pedic to Buy Sealy
Posted on September 27, 2012 by
LEXINGTON, Ky., and TRINITY, N.C.-In a deal that will create a $2.7 billion mattress powerhouse and change the face of the sleep-products industry, Tempur-Pedic has signed an agreement to purchase Sealy for a total transaction value of $1.3 billion.
To close the deal, Tempur-Pedic will pay $2.20 a share for all of Sealy's outstanding stock, representing a premium of about 23 percent on Sealy's 30-day average closing price on Sept. 26. In addition, Tempur-Pedic will assume or repay all of Sealy's outstanding convertible and non-convertible debt. The transaction is expected to close during the first half of 2013.
After the closing, Tempur-Pedic and Sealy will continue to operate separately. Larry Rogers, Sealy's president and CEO and a 33-year veteran of the mattress manufacturer, will remain as CEO and report to Mark Sarvary, CEO of Tempur-Pedic.
In a joint statement, the two companies explained the deal as bringing together two companies with highly complementary products, brands, technologies and geographic footprints. The acquisition will put the Tempur, Tempur-Pedic, Sealy, Sealy Posturepedic and Stearns & Foster brands under one corporate umbrella. Geographically, these mattress brands cover North America, South America, Europe, Asia and Australia.
From a product standpoint, the deal unites Sealy, one of the largest makers of innerspring and hybrid innerspring mattresses, with Tempur-Pedic and its technologies in visco-elastic mattresses, adjustable bases and pillows.
Sarvary described the move as "a transformational deal ... 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."
Along with news of the acquisition this morning, Sealy released the results of its fiscal third quarter. The company posted a net loss of $106,000 for the quarter, which ended on Aug. 26, compared to net income of $6.6 million in the third quarter of last year.
Sealy's net sales reached $365.4 million in the quarter, up 9.4 percent over last year's third quarter. Gross margin finished at 40.6 percent, down 40 basis points from last year. Selling, general and administrative expenses rose 15.9 percent in dollars and 180 basis points as a percentage of sales, to 33 percent.