March 24, 2023

DealBook: Tempur-Pedic to Buy Sealy

The mattress maker Tempur-Pedic announced on Thursday that it was buying rival Sealy for $2.20 a share, or $228.6 million. Including the assumption of debt, the transaction is valued at $1.3 billion.

The per-share price represents a premium of about 23 percent to the 30-day average of Sealy’s shares.

“This is a transformational deal that brings together two great companies,” Tempur-Pedic’s chief executive, Mark Sarvary, said in a statement. ”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.”

Under the deal, which is expected to close in the first half of next year, Sealy will finally cut ties with Kohlberg Kravis Roberts, which owns about 46 percent of the publicly traded company.

Sealy has been in private equity hands since 1989, when it was first taken private by Gibbons, Green, van Amerongen, a New York-based buyout shop. Bain Capital acquired the company in 1997 and then handed it off to K.K.R. in 2004, for $1.5 billion. Two years later, K.K.R. took the mattress-maker public, but maintained a sizable stake and influence in the company.

However, K.K.R.’s management of Sealy has often tested investors’ patience. Earlier this year, several investors blamed K.K.R. for Sealy’s poor financial performance and lobbied for a shakeup of the company’s board. In one March filing, H Partners, a hedge fund with a minority interest in the company, said K.K.R. held a “dominance” over the board, because the majority of the directors had current or previous ties to K.K.R. Last year, the company recorded a loss of $9.8 million.

According to Tempur-Pedic’s statement on Thursday, Sealy will continue to operate as an independent unit. Its longtime chief executive, Larry Rogers, will stay on as the head of Sealy, reporting to Mr. Sarvary.

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