Simmons sighs in relief as deal announced
So now we know that those Serta-Simmons rumors were true, sort of.
The purchase agreement announced today between Simmons and an investor group led by Ares Management and the Ontario Teachers’ Pension Plan, the owners of Serta, would dramatically change the face of the bedding landscape, sort of.
It will create a new No. 1 in the mattress world: Simmons plus Serta is almost $2 billion in sales, compared to $1.2 billion for Sealy, the way things stood at the end of last year.
But I’m sure you didn’t miss the point that Serta’s owners made about intending to operate Simmons and Serta as separate and distinct entities. There is more than a little skepticism about that claim in industry circles. Time, of course, will tell.
It’s also worth noting that the deal has not closed, and that the Federal Trade Commission’s review of the implications of the proposed transaction continues. Some believe the FTC will squash the deal. Again, time will tell.
For now, Simmons has to be pleased that it is finally moving toward the conclusion of a process that has dragged on for month after agonizing month. Uncertainty in business is usually not a good thing. Simmons took a big step forward in announcing the purchase agreement.
Blogger commented:
I agree Dave. My post was in response to RightB's post. Sarcasm included. I enjoy open dialogue, I just don't like Monday Morning Quarterbacks taking shots at other bloggers when they share no opinion on the subject themselves.
Dave Perry commented:
Thanks for this lively discussion. Blogger: I can't let you frame the terms of this discussion. All bloggers are welcome to share opinions, if they wish. The more insightful, the better. And on the topic of good grammar and stuffs, louzee spellings are not so grate. (Hey, I'm kidding!) Yes, good spelling and good grammar are always appreciated. Thanks for your posts, one and all.
Blogger commented:
Yeah people. Don't you know a blog is meant for only well thought out, analytically sophisticated, hyper-edited thought. Keep your personal feelings to yourselves. And for those well critics on this blog, keep it coming, this blog and our industry need more people with your super attitudes and concise thoughts.
RightB commented:
I love the comment made by Learn to Write!
Everyone is quick to respond, but too slow to think!
Making a profit commented:
The only problem with most of the posts here is that everyone is still viewing this as one bedding company buying another one. That's not the case. The Ares group and Ontario's teachers pension plan are going to do whatever makes them the most profit. Simmons is just another piece of thier portfolio. They will own two strong companies with track records of making money. Now that Simmons won't be weighed down with all the debt they will make them money. Merging the two may or may not be the best money making option. Keeping them separate may be a brilliant move on the investment firms part. There's nothing like siblings competing for parents attention and respect to get the best out of them. I give it a coin toss as to if a merger happens or not.
great bed commented:
strong regional players ,like Gold bond, therepedic,etc. should understand that they can capitalize on like kind goods in this market while the cats away....build new dealer relationships with REAL VALUE and enjoy the ride
Sleep IN commented:
Here's hoping the two combine their best talents. Simmons feel with the Serta marketing. That said, I floor both currently without Sealy. Let's just say there is a good chance I take on Sealy to balance the floor.
Learn to write commented:
People! Can anyone express themselves in writing without run-on sentences, misspelled words, punctuation errors or other grammatical mistakes? It is painful to read these comments.
nostradomis commented:
Simmons warranties was exactly what came to my mind in regard to 11. It's going to be very grey. The two separate company line is a total rouse. They simply need time to evaluate Simmons personnel as well as production facilities. This will take a year or two. System integration will take time. I just hope Serta's utter arrogance and indifference to it's vednor's doesn't spill over.....
Jeff Giagnocavo commented:
Obviously I agree with all the other posts here so far. No doubt that once they emerge from chapter 11 and all is clear the clean out and sale of excess anything will happen. And new ownership will get to keep all the proceeds of assets sold. Bottom line todays brand name mattresses are ALL about marketing, and to those that would disagree I say this. Look at each name brand companies supplier inovoices I would venture to say that 70% of dollar purchases are all from the same vendor and mostly the same items. So when we all buy the same stuff the only thing that is left is the "Spin" or "Sizzle" Right??? Even now, Serta does it with 5 Star and Serta, Sealy with Sterns and Foster, Spring Air with Chattam and Wells. It is all about the spin. What hurt our industry is when we all got away from making good quality products at a fair price with no smoke and mirrors behind them to inflate the selling price. That is just my .02 on this one.
Bluesky commented:
Don't read to much into this first press release. We were all told exactly what Ares wanted us to know....a first soft glancing blow. The Chapter 11 and subsequent restructure will clearly change the landscape of the Simmons Company as it currently stands. Two corporate offices...don't need two. Two R&D facilities and staff....don't need two. Two factories in the same city...just need one. Two sales staffs.....see Sealy/Stearns and Foster. What Ares bought was a brand. After all, aside from the assets in the Simmons factories, what of value is there to justify $760M(minus dept). I'd bet the brand will be saved and not much else. To bad too, there are some great people at Simmons and some great friends too. Hope I'm wrong with my attempt at Nostrodomis, for peoples sake.
Helpmesleep commented:
Hmmm! Serta and Simmons co-exist. Maybe or maybe not. Here are my predictions. Since Serta is a marketing company, and builds brands around celebrity names, the landscape of Simmons Beautyrest may see some sort of change in marketing. If you thinking these two companies are not going to collaborate about product innovations, we all are thinking stupid. Sealy has a lot to worry about. Ares Management only looks at their investment in one way that is ‘value.’ Ares Management will closely operate these two companies to become more profitable, increase market share, and better branding. Should we be worried as small dealers? Not really. Will the Philosophy Simmons change? Most definitely! Investors always think they can do better based on what information they have from an open book comparison. It is like going to bed with more than one partner every night. Which one is better and how can I make one jealous to make them better? And yes Steve Frendrich who chuckled, “Can I come,” you are invited to Bob Sherman’s future parties discussed at the Bedding Conference Suppliers’ Panel Meeting.
Greg Follett / Follett Furniture commented:
As a smaller independent retailer and a Simmons dealer, I think that we are in for some rough times ahead as far as the major players are concerned. Of course I am also concerned about losing Simmons all together but more than that I find it hard to believe that the two big names Serta and Simmons will actually remain as separate players on the retail sales floors in the future. At this point we are beginning to rely quite heavily on regional bedding suppliers (ie: englander, restonic, etc.) to fill our floor...at least with the regional suppliers we have a little more ability to sell products that are still going to be warranted in a couple years...as for Simmons...I am not as confident that they are going to be around in a couple years...it's pretty scary to think about how many Simmons beds we have out in our community that could possibly end up being un-warranted one day...Hopefully, this new agreement will work and Serta and Simmons will both co-exist and thrive together under one owner...guess we'll have to wait and see.
