Tempur-Pedic Acquires Sealy In A $1.3 Billion Cash & Debt Deal

Tempur-Pedic Acquires Sealy In A $1.3 Billion Cash & Debt Deal

Leading mattress manufacturer Tempur-Pedic International Inc. (NYSE:TPX) announced Thursday, that it plans to acquire its rival, Trinity, N.C.-based Sealy for $1.3 billion. Tempur-Pedic agreed to pay $2.20 per Sealy Corporation (NYSE:ZZ) share, 3 percent higher than Sealy’s closing price of $2.14 on Wednesday. After the announcement, Sealy shares jumped almost 10 percent to $2.35 in premarket trading.

Tempur-Pedic Acquires Sealy In A $1.3 Billion Cash & Debt Deal

Sealy Corporation (NYSE:ZZ) has 103.9 million outstanding shares, that give it a valuation of $228.6 million. Tempur-Pedic International Inc. (NYSE:TPX) said it will pay that amount in cash, plus it will pay off all of Sealy’s outstanding debts. According to the official data, the deal is valued at $1.3 billion, including debts. Tempur-Pedic shares rose 5 percent to $28.10, before the market opened today.

This Top Energy And Infrastructure Fund Is Bullish On U.S. Utilities

UtilitiesThe Electron Global Fund was up 2% for September, bringing its third-quarter return to -1.7% and its year-to-date return to 8.5%. Meanwhile, the MSCI World Utilities Index was down 7.2% for September, 1.7% for the third quarter and 3.3% year to date. The S&P 500 was down 4.8% for September, up 0.2% for the third Read More

The companies said in a joint statement that the deal will create a $2.7 billion global bedding giant. “Tempur-Pedic and Sealy together, will have products for almost every consumer preference and price point, distribution through all key channels, in-house expertise on most key bedding technologies, and a world-class research and development team,” Tempur-Pedic CEO Mark Sarvary said.

However, the companies will operate independently of each other. Sealy’s current CEO, Larry Rogers, will remain in his office and will report to Mark Sarvary, the chief executive of Tempur-Pedic.

Tempur-Pedic International Inc. (NYSE:TPX), which owns Tempur and Tempur-Pedic brands, produces and markets pillows and mattresses in 80 countries. Sealy makes mattresses under the brands Sealy, Sealy Posturepedic, and Stearns & Foster. Both companies have a strong presence in North America, Europe, and Asia.

Tempur-Pedic revealed that it has secured a $1.77 billion debt from Bank of America. The company will use funds to pay down its own debts and those of Sealy. As of June 30, Tempur-Pedic has $680 million of debt. Barclays analysts expect that the deal will result into $40 million in annual cost savings for the combined company.

Owners of more than 51 percent of Sealy shares have approved the deal, so the companies need not obtain additional shareholder approvals. The deal is likely to be completed in the first half of 2013.

Updated on

No posts to display