Sauder buys O'Sullivan
Factory not part of deal; will operate short term
By Larry Thomas -- Furniture Today, April 23, 2007
Archbold, Ohio — Sauder Woodworking, North America's largest ready-to-assemble furniture producer, has acquired key assets of O'Sullivan Inds., a rival RTA producer that has been struggling financially for months. Terms weren't disclosed.
The deal includes all of O'Sullivan's intellectual property, including its name, select product drawings, patents and a licensing agreement to produce garage storage units under the Coleman brand name.
It does not include O'Sullivan's 1.1 million-square-foot factory in Lamar, Mo., or any production equipment.
O'Sullivan halted production earlier this month, but work at the factory resumed last week under a short-term operating agreement with Sauder.
Kevin Sauder, president and CEO of Sauder Woodworking, said his company will purchase raw materials and pay O'Sullivan to operate the plant "for a few months" until production is shifted to Sauder's factory in Archbold. That will add about 200 jobs there.
"This will allow us to keep O'Sullivan product on retail floors and in stock during the transition," Sauder said.
He said the purchase will allow Sauder to expand its business with many key retailers, notably Lowe's, Staples, Big Lots, Shopko and Wal-Mart.
"Clearly, adding major portions of the customer base of this company will significantly expand our sales ... and grow market share," Sauder added. "This arrangement will help us retain our position as a world-class domestic producer, while bringing more jobs to Archbold."
Sauder said his company has not decided how many O'Sullivan SKUs will remain in the line on a long-term basis.
O'Sullivan emerged from Chapter 11 bankruptcy protection in April 2006, but has continued to struggle financially. The company, which primarily is owned by a consortium of private equity firms, closed a factory in South Boston, Va., late last year and also eliminated its showroom at the High Point market.
O'Sullivan had a showroom at January's Las Vegas market, but Sauder said he was not sure if Sauder Woodworking, which has never exhibited in Las Vegas, would secure showroom space there.
O'Sullivan officials said the deal is part of an "orderly wind- down of its business" and said the Lamar factory would close no later than October.
"O'Sullivan's decision to cease operating came after months of diligent efforts to restructure its debts and maintain its business as a going concern, either through the refinancing of its senior loans or the sale of the company," the company said in a statement. "Discussions with potential deal partners have now ended."
O'Sullivan's corporate offices are in the Atlanta suburb of Roswell, Ga., but most of its 735 employees work out of the Lamar site.
O'Sullivan had sales of about $200 million last year, while Sauder racked up RTA furniture sales of some $550 million. The Sauder figure includes sales from Sauder Global Sourcing, formerly known at Studio RTA.
Sauder also owns case goods manufacturer and importer Progressive Furniture, as well as contract furniture producer Sauder Manufacturing.
