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Ares Management, Ontario teachers group complete Simmons buy

By Jay McIntosh -- Furniture Today, January 25, 2010

ATLANTA —

Simmons Bedding has been acquired by Ares Management and the Ontario Teachers' Pension Plan, completing a deal that brings Simmons and fellow bedding major Serta under the same ownership.

The transaction was announced in September and approved this month by the U.S. Bankruptcy Court in Delaware, where Simmons had filed for Chapter 11 protection. With the completion of the acquisition, the company is no longer in Chapter 11.

The deal involved total consideration of $758 million, including equity from the purchaser and certain of Simmons' lenders, as well as debt commitments from lenders. The terms are essentially the same as those announced in September, the company said.

As part of the transaction, Simmons trimmed its debt to $450 million, down from $1 billion when the deal was announced. The company said the debt reduction will make it more competitive.

“With Simmons' new capital structure, the company is well-positioned to further unlock value by growing the franchise,” Bennett Rosenthal, senior partner at Ares Management, said in a statement. “Simmons will now be better able to build upon its strong ties with consumers and retailers by leveraging its longstanding reputation for innovative products, superior customer service, and leadership in the bedding industry.”

“This process has confirmed our confidence in the strength of Simmons' brand and its relationships with customers, as well as the depth of its management team,” said Erol Uzumeri, senior vice president of Teachers' Private Capital, the investment arm of the Ontario teachers group.

“Simmons is a resilient company that, in fact, performed well in 2009 despite having to navigate both a tough economy and its restructuring process. We look forward to working with the company to create value in the business.”

Serta and Simmons will operate as separate entities with their own management teams, the buyers said.

In addition to Bankruptcy Court approval, the deal also cleared U.S. and Canadian antitrust regulators and was approved by Simmons' suppliers and noteholders, the company said.

“Today's closing marks a new beginning in the 140-year history of Simmons Bedding. Our new partnership with Ares and Teachers' is extremely complementary to our business style, will allow us to aggressively invest in our brand, and will enhance our legacy of innovation and excellence by bringing the most relevant products and services to our customers,” said Steve Fendrich, Simmons president.

“We look forward to working with our new owners to make Simmons an even stronger leader in the bedding industry,” he added. “Additionally, I am extremely grateful to the people of Simmons for their focus and dedication as well as to our customers and suppliers for their tremendous support throughout this process.”

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Ares Management, Ontario teachers group complete Simmons acquisition

Jan 21, 2010

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