Tempur-Pedic International Inc. (TPX) agreed to acquire mattress
company Sealy Corp. (ZZ) in a deal valued at $229 million that will
combine two leading industry rivals with well-known brands.
The deal comes as competition has stepped up lately in the
once-sleepy mattress industry, amid a stream of product
introductions and promotions as players vie for territory in the
high-end bedding market.
Sealy shareholders will receive $2.20 a share, a premium of 2.8%
to Wednesday's close. Sealy's shares topped the offer price
premarket, up 7.4% at $2.30. Through Wednesday's close, the stock
is up 96% this year.
Including debt assumption, the deal is valued at about $1.3
billion.
Sealy Chief Executive Officer Larry Rogers said, "Together, we
believe that we can deliver more value than either business could
on its own by leveraging our strong combined assets."
The companies will operate separately after the deal closes,
which is expected in the first half of next year. The combination
is expected to add to earnings in the first full year of operations
and the integration is expected to result in cost savings of more
than $40 million by the third year, mostly through purchasing,
supply chain and increased efficiencies.
Mr. Rogers, Sealy's longtime CEO, will continue to lead that
company and report to Tempur-Pedic CEO Mark Sarvary.
Stockholders holding about 51% of Sealy's outstanding common
stock have executed a written consent approving the transaction. No
further shareholder votes are required.
Tempur-Pedic intends to finance the acquisition through debt
financings.
A conference call to discuss further details of the planned
acquisition is set for Thursday at 8 a.m. New York time.
Tempur-Pedic shares closed Wednesday at $26.78 and were inactive
premarket. The stock is up 29% this year.
Write to Tess Stynes at Tess.Stynes@dowjones.com
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