NEW YORK-H Partners Management has sent a letter criticizing the proposed acquisition by Tempur-Pedic of Sealy to the Sealy board of directors.
The letter was also filed with the U.S. Securities and Exchange Commission. H Partners is Sealy’s second largest shareholder, owning 16.6 percent of the outstanding shares. In the letter, dated Sept. 27, H Partners said, “Today, we were shocked to observe that this board, after selling shares to public shareholders in April 2006 at $16 per share, is contemplating a sale of the company at a meager $2.20 per share.”
Sealy’s largest shareholder is KKR, which owns 44 percent of the outstanding shares. “In effect, the KKR-dominated Board is locking in an astounding 86 percent loss for public shareholders,” the letter said. Noting the recent purchase of a majority stake in AOT Bedding Super Holdings, parent of Serta and Simmons (which H Partners valued at a $3 billion “enterprise value”), the letter said, “With effective execution, we believe Sealy’s long-term value is at least $3 billion or $7.50 per share.”
H Partners said it is “extremely troubled” by the board’s failure to consider alternative bids for Sealy. “The Board must either (1) conduct a thorough sale process and solicit bids from all potential acquirors, or (2) commit to maximizing long-term value by appointing a capable and proven management team in consultation with all shareholders,” the letter said.