Tempur-Pedic agrees to acquire Sealy in $1.3 billion deal
Jay McIntosh -- Furniture Today, September 27, 2012
The blockbuster deal unites a fast-growing producer of visco-elastic foam mattresses in Tempur with what until last year had been the largest U.S. producer of innerspring beds in Sealy.
The offer price of $2.20 per share for Sealy represents about a 3% premium over the publicly traded company's Wednesday closing price of $2.14. Tempur-Pedic said it has the written consent of 51% of Sealy shareholders for the deal, and that the boards of both companies have approved it.
The deal is expected to close in the first half of 2013.
"This is a transformational deal that brings together two great companies, each with globally recognized brands," said Tempur-Pedic CEO Mark Sarvary.
"Tempur-Pedic and Sealy together will have products for almost every consumer preference and price point, distribution through all key channels, in-house expertise on most key bedding technologies, and a world-class research and development team. 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," Sarvary said.
Tempur-Pedic and Sealy will operate independently, the companies said in a statement today. Sealy CEO Larry Rogers will report to Sarvary.
Rogers, who had announced months ago that he would retire when a replacement is found, said that with the newly announced deal, "I will have to put those plans aside."
He said in a statement, "The complementary product and market fit of these two companies deliver a unique opportunity to create the first full spectrum, global bedding company that addresses all market segments and consumer preferences. Together, we believe that we can deliver more value than either business could on its own by leveraging our strong combined assets."
Tempur-Pedic said the deal is expected to be accretive, or an addition to its earnings, in its first full year of operations, and that annual cost synergies of the combined companies will exceed $40 million by the third year.
The companies said that together, they had combined pro forma, adjusted earnings before interest, taxes, depreciation and amortization of $504 million in the 12 months ended June 30 for Tempur-Pedic and May 27 for Sealy.
"The combined companies will have strong cash flow characteristics that will enable rapid debt reduction and continued investment growth initiatives," officials said.
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