Sealy shareholder H Partners says sale price is too low

Larry Thomas -- Furniture Today, September 28, 2012

NEW YORK — Sealy's second-largest shareholder sent a strongly-worded letter to the company's board of directors Thursday afternoon saying it was "shocked" to learn the board had agreed to sell Sealy to Tempur-Pedic for $2.20 per share.

Shareholder H Partners Management, which owns 16.6% of Sealy's stock, contended that the company is worth at least $7.50 per share, and repeated earlier criticism of the influence exerted by the investment firm Kohlberg Kravis Roberts, which owns about 44.5% of Sealy's shares.

"We were shocked to observe that this board, after selling shares to public shareholders in April 2006 at $16 per share, is contemplating a sale of the company at a meager $2.20 per share. In effect, the KKR-dominated board is locking in an astounding 86% loss for public shareholders," the letter read.

H Partners said the board "should be deeply embarrassed" that Tempur-Pedic's stock rose more than 15% after the acquisition was announced. The shareholder argued that the approximately $260 million increase in Tempur-Pedic's market value is equal to 80 cents per Sealy share, "implying an immediate value of at least $3 per Sealy share."

"We demand that the board fulfill its fiduciary duty to maximize value for all shareholders," the letter read, arguing that the board should have considered alternative bids and seek approval from Sealy shareholders who aren't affiliated with KKR.