UPDATE: Advent to acquire majority interest in Serta, Simmons parent
David Perry -- Furniture Today, August 6, 2012
BOSTON — Private equity firm Advent International said Sunday it has agreed to acquire a majority interest in AOT Bedding Super Holdings, the parent company of National Bedding Co., the majority owner and licensee of Serta, and Simmons Bedding Co.
Under the proposed deal, Serta and Simmons would continue to have separate sales, marketing and merchandising departments, the companies said.
Financial terms of the proposed transaction were not announced, but media reports put its value at about $3 billion. The deal is expected to be completed by the end of this year.
Current owners Ares Management LLC and the Ontario Teachers' Pension Plan will retain a significant equity stake, the companies said in a press release issued today.
Serta CEO Bob Sherman and Simmons CEO Gary Fazio said they welcome the deal.
"We are looking forward to our partnership with Advent, as well as our continued relationship with Ares and Teachers'," Sherman said. "Advent's experience and resources will help Serta continue our track record of growth and enhance our partnerships with customers and suppliers."
"Over the past two years, we have invested significant resources to better understand and then meet the needs and preferences of our customers," Fazio said. "We are thrilled to be working with the team at Advent, as well as our existing investors, to continue to gain market share by providing superior products and customer support."
Sherman and Fazio declined additional comment.
"We are excited to be investing in Serta and Simmons, two companies with strong momentum in an industry we believe is poised for growth," said Jefferson Case, principal at Advent International. "We look forward to working with our investment partners and the management teams of both companies."
"Our strategy going forward is to continue to grow the businesses by ensuring that Serta and Simmons remain focused on delivering high quality mattresses that help people sleep better," said Advent Managing Director Steven Collins.
Advent outbid two other private equity firms, Bain Capital and Berkshire Partners, according to media reports.
"We are proud to have assembled the leading company in the bedding industry over the last seven years," said Bennett Rosenthal, senior partner at Ares Management. "We have enjoyed our partnership with Bob and Gary, as well as the rest of the leadership team, who have led the growth of Serta and Simmons to the top position in the industry. We are equally enthusiastic about our partnership with Advent and our participation in the company's continued growth."
"This investment will represent a significant step in the implementation of Serta's and Simmons' strategies to deliver the best possible products in the marketplace,' said Jane Rowe, senior vice president, Teachers' Private Capital, the private investment arm of the Ontario Teachers' Pension Plan. "With the Advent team's experience and resources, and the hard work of the management team and committed employees, we see excellent opportunities to continue growing the business and look forward to remaining a part of this ongoing success story."
Serta and Simmons will continue to be managed jointly by the board of directors of their holding company and will continue, as in previous years, to maintain separate sales, marketing, merchandising and customer-specific product design functions, the companies said.
Serta and Simmons will typically go to the marketplace separately, although, in some cases, the two companies will work together with dealers as well as in a variety of other areas to achieve cost efficiencies and implement best practices, they said.
Boston-based Advent is an active investor in the retail and consumer sector, having invested in ten companies over the last five years. Its investments have included Five Below, Party City, Lululemon Athletica, Hudson News and Bojangles.
Founded in 1984, Advent says it is one of the world's leading global buyout firms, with offices in 16 countries on four continents. Advent describes itself as "a driving force in international private equity." Since its inception, Advent has raised $26 billion in private equity capital and, through its buyout programs, has completed over 270 transactions in 35 countries, the company said.
Ares and the Ontario Teachers' Pension Plan acquired Serta in 2005 and added Simmons to the portfolio in 2010. Both Serta and Simmons have experienced significant growth under that ownership. Serta became the nation's largest mattress maker last year, passing long-time sales leader Sealy.
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