Advent International closes deal for majority stake in Serta, Simmons
David Perry -- Furniture Today, October 30, 2012
BOSTON — Bedding majors Serta and Simmons officially have a new owner, one that is committed to growing both brands, officials said.
Private equity firm Advent International, based here, has acquired 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.
The deal, announced in August, closed in October after the government granted regulatory approval. Advent now controls brands that together command a market share of 34%. Serta's share last year was 18.3%, while Simmons had a 15.7% share, according to Furniture/Today's report on the Top 15 U.S. Bedding Producers.
The purchase price was not disclosed, but media reports have put the value of the transaction in the $3 billion range.
Serta and Simmons, both enjoying strong growth this year, will continue to have separate sales, marketing and merchandising departments, officials said.
In separate interviews, Serta President Bob Sherman and Simmons CEO Gary Fazio presented optimistic looks at how their brands will fare under the new ownership.
"I am committed long term," said Sherman. "I love the company and I love the position we are in." He said Advent endorses the aggressive brand-building strategies of both companies.
Fazio said Simmons has a "terrific" future under Advent's ownership. "They understand the category and appreciate it for what it is and for what it could be," he said. "They like what we do and what we could do."
The Advent deal was expected to close by the end of this year. Sherman said "everything went like clockwork" to bring about the speedy close.
Former owners Ares Management LLC and the Ontario Teachers' Pension Plan retain a significant equity stake, officials said.
When the Advent deal was originally announced, Advent officials said they believe the bedding industry is poised for growth. Industry forecasts call for unit and dollar growth in 2013 and 2014.
Serta and Simmons are both doing well this year, their leaders said.
"Our business continues to be strong," said Sherman, whose company recorded an 18.1% sales gain last year to replace Sealy as the nation's largest bedding producer.
Serta's iComfort line of gel memory foam beds, a soaring success since it was introduced in January 2011, continues to show "very aggressive increases," Sherman said. And Serta has tripled its forecasts for the business it will do this year with its iSeries line of gel memory foam and innerspring beds. "The number of dealers adding that line weekly continues to grow," he said.
Fazio said Simmons, which posted a 16.5% sales gain last year, is up double digits this year. "We are not up as much as we were," he said, "but we were up an awful lot."
Simmons added a new ComforPedic line at the recent High Point Market, an unusual time for a major bedding launch. "The technology was available and we were ready," Fazio said. "We thought, ‘Why not show it and get it out there?' It's a win-win."
Both executives said the year should end on an upbeat note.
Fazio noted that "quite a few promotions" are on the fourth-quarter calendar, and said a closeout of ComforPedic models should be a strong event.
Sherman said the fourth quarter should be a robust one for bedding retailers, as producers have strong promotional programs in place for the period. Once the presidential election is over, bedding retailers should make aggressive promotional plans for sales in the coming weeks, he said.
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