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Serta group acquired

National Bedding controls brand

By David Perry -- Furniture Today, August 7, 2005

Los Angeles — Two private equity groups are joining forces to acquire National Bedding Co., the bedding major that controls the Serta brand.

Ares Corporate Opportunities Fund, the private equity fund of Ares Management, and Teachers' Private Capital, the private equity arm of the Ontario (Canada) Teachers' Pension Plan, said last week they had signed a definitive agreement to buy NBC, which does business as Serta International.

Terms were not disclosed.

NBC, the largest producer of Serta-brand bedding, holds 27 of Serta's 34 U.S. licenses and accounts for about 80% of Serta's U.S. sales. The remaining Serta licensees are not part of the sale and remain independently owned.

There is no change in NBC's service agreement with those licensees, in which NBC agrees to provide them with comprehensive support for the brand, Serta officials said.

News of the deal ends months of speculation in the industry about a possible sale, although Serta had not said publicly that the company was available.

"We are thrilled to partner with Ontario Teachers in this transaction," said Bennett Rosenthal, a partner in Ares Management. "We are also pleased that the existing equity owners of NBC will be reinvesting a portion of their proceeds along with us, and that the senior management team will remain in place."

Added Jim Leech, Ontario Teachers' senior vice president: "We are very pleased to be acquiring a company with such a strong and experienced management team and an extraordinary consumer brand. NBC is an excellent fit for our growing private equity portfolio."

"We are looking forward to our partnership with Ares and Ontario Teachers," said Bob Sherman, CEO of NBC. "Their strong, committed financial sponsorship will allow Serta to continue its track record of growth and partnership with our customers and suppliers."

Burt Kaplan and Richard Yulman, NBC's founders, will remain investors in the company as well as members of the company's board of directors.

Ares has had a minority stake in NBC for two years, Rosenthal said. The Los Angeles-based investment firm, founded in 1997, has more than $7 billion of committed capital under management. Teachers' Private Capital is the private equity arm of the $C85 billion Ontario Teachers' Pension Plan, which invests on behalf of 255,000 active and retired teachers in Ontario.

Goldman, Sachs & Co. and William Blair & Co. represented NBC in the transaction.

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Two private equity groups to acquire Serta

Aug 2, 2005

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