Sealy sells for $1.5 billion
KKR, management to acquire bedding leader
By David Perry -- Furniture Today, March 7, 2004
TRINITY, N.C. — Bedding major Sealy said last week it will be sold to affiliates of Kohlberg Kravis Roberts & Co. in a transaction valued at approximately $1.5 billion.
This is the second billion-dollar-plus deal announced in the bedding industry in four months. Simmons was sold to a group led by Thomas H. Lee Partners for $1.1 billion in December.
Sealy has signed a definitive merger agreement with the affiliates of KKR, a New York-based buyout specialist, which will acquire the bedding major from a private investment group that includes Bain Capital, Charlesbank Capital Partners, JPMorgan Partners, CIBC Argosy Merchant Fund and BancBoston Capital.
KKR and Sealy management will acquire approximately 92% of the company, with existing Sealy shareholders retaining 8%. The sale is expected to close in early April.
Members of Sealy management will hold an equity stake, and Sealy officials said no changes are currently contemplated in management, strategy or operations.
Sealy, the world's largest bedding producer, had sales of $1.2 billion in 2003.
"We are extremely pleased to announce our new partner- ship with KKR," said Dave McIlquham, Sealy's president and CEO. "KKR has a long history of investing in world-class consumer product companies to foster growth and expansion over the long term. KKR was particularly attracted to Sealy's strong market position and our leading brand names in the Sealy Posturepedic and Stearns & Foster product lines."
McIlquham said that during the past year, Sealy "achieved record sales, reduced debt significantly by carefully managing working capital" and launched its new UniCased Sealy models and TripLCased Stearns & Foster models.
He said the company looks forward "to working with KKR to expand and accelerate our product development programs to bring new innovation and consumer-preferred products to our customers. We also expect to move forward with the international expansion of our well-known brands."
Scott Stuart, a member of KKR, said Sealy "has long been known for setting the standard of excellence in bedding products. Equally important, Sealy today is a global company, leading the industry in brand recognition, market share, technological advancement and product innovation. Its recent record sales performance reflects its brand strength as well as new product introductions that are being extremely well received in some of the fastest growing segments of the market."
The merger, which has been approved by Sealy shareholders, will be financed through a combination of debt and equity. It is subject to customary conditions, including the funding of the transaction pursuant to existing financial commitments. Substantially all of Sealy's debt will be refinanced in connection with the transaction.
KKR's investments in consumer products companies include Duracell International, The Gillette Co., and Elmer's Products.
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