FTC probing Serta-Simmons union
Remember those rumors about No. 3 bedding producer Serta buying No. 2 bedding producer Simmons?
There is definitely something to them.
We know for a fact that the Federal Trade Commission is investigating what a Serta-Simmons union would mean for the industry’s competitive landscape. What isn’t so clear is how the FTC might rule on whether such a union would be anti-competitive or not.
Not surprisingly, we’ve heard two schools of thought on that. One holds that the FTC appears to be building a case to reject a Serta-Simmons deal. Another sees the FTC as ultimately approving such a union.
We’re no expert in these matters, but we would note that the Simmons 2008 market share of 15.8% added to Serta’s 15.7% share would yield a combined share of 31.5%, which, in this fragmented industry, would make the new entity bedding’s No. 1 producer, but one that would still face a bevy of significant competitors.
Note that we aren’t predicting that Serta will acquire Simmons, although that is what some conventional thinking these days does hold. Scenarios involving other potential owners for Simmons are also being floated.
But there is no doubt that the FTC is looking into the implications of a Serta-Simmons deal, and that means something.
matt rep 007 commented:
Who is Edwin Shofner ?
Mattress Man commented:
Dear Valet Parking,
I think Edwin Shoffner is much too smart to buy Simmons in their current financial condition. If Serta takes it, pre-bankruptcy, let them have it.
mattfan commented:
I think its a brilliant move by Serta. The new company doesn't have 31.5% share, but some number in the mid to high twenties. There are too many dealers who leverage manufacturers to allow the same volume each individual brand currently enjoys. The "win" will be in the operating income after consolidating plants and maximizing absorption.
If history repeats itself, this could drive further consolidation. Who's next? Sealy, Tempur, Select?
Valet Parking commented:
Doesn't Serta know that Edwin Schoffner is buying Simmons?!?
aldks commented:
asdf
Vic . of NJ commented:
Serta should stay clear of those losers Simmons.
Simmons warranty is a bunch of BULL****. If you buy a soft mattress and the springs give out, Simmons replaces it with what they deem is "comparable" and in our case it was extra firm. We had to buy another mattress set for $2800. All I got out of them was nerve and hip problems for the last 6 months. NO ONE should buy Simmons especially Serta, unless they plan on improving warranty and make exchanges really equal and that means comfort NOT price ! If you offer different textures for sale, you should offer the same for replacement !
XMattressguy commented:
bigger is usually not better in this industry.Now you would have two companies that have recently put out mediocre mattresses producing more of the same unless serta had the smarts to position it as Sealy did with S&F.Make Simmons the luxury guy with MMap pricing and Serta can clean up the trimmings with the rest of the lineup!
BM2 commented:
This possible "union" simply proves how times have changed. As competitive as the mattress industry is, how can the two product "stories" relative to the consumer question, "who is the better made brand" square with the consumer? If this "union" happens it will simply prove to the consumer that the industry is just a bunch of marketing BS with no substance and simply confuse them more. But then again, over the last several years so many competitors of Simmons have introduced "enclosed" coil products that they have been waving the white flag in surrender -- why not go the nextstep and buy them?
bm3 commented:
I know what the name of the new Serta/Simmons company would be: Sermons! They would be preaching to everyone why they make the world's best mattress(es).
bedz commented:
Random thoughts from an ex-banker......
In short, yes the bondholders either forgive part of the debt or no deal. The operations will be consolidated with outdated or inefficient properties jettisioned thus reducing the overall debt load. That's the only way this deal will happen. Yes, they will undoubtedly close some facilities and roll up production to the more efficient ones whether that be Serta or Simmons facilities.
Yes and no. Yes they may operate initially as separate entities, and no they will eventually all be eventually converted to one.
The ftc argument is baseless. Combined would give them 30% of the market. Hi Google, how ya doin with 70%. Microsoft, Apple (ipod), etc.
MacDaddyMattress commented:
Is Serta acquiring Simmons or are the investment groups that own Serta acquiring Simmons?
A Solution commented:
Maybe Serta and Simmons can ask L&P's lawyers to help. They seem to know how to win the FTC game.
George1 commented:
I guess this explains why Simmons is offering dealers a good terms in return to buy millions of dollars worth of merchandise… To look good.
MacDaddyMattress commented:
it will be interesting either way.
midwestbedman commented:
No doubt Serta's management team would be in charge...as they should. They have done an excellent job the last few years outperforming the other S companies. My only question would be, are they assuming the massive debt load that Simmons is obligated to? I would think they are in negotiations with their bondholders for some kind of haircut...
George3 commented:
No need to speculate until if and when this happens. But if it does, the companies will surely address all of these issues as part of communications efforts.
NCMattman commented:
I doubt that anyone knows anything just yet. However, I would think that there would be losses from both sides as far as jobs are concerned.
Here's an idea/question: If this goes through, what are the chances they operate as seperate entities, as far as their "face" to retailers and consumers? Maybe something like what Sealy did with Stearns and Foster back in the day?
S.fan commented:
Well if this happens ,which factorys will be closed? What would the company be called? How many will loose their jobs.If Serta acquires Simmons who would manage it the simmons people or the serta people.Wow so many unanswered questions.Any one with any Info?
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