LEXINGTON, Ky. and
TRINITY, N.C., Sept. 27, 2012
/PRNewswire/ -- Tempur-Pedic International Inc.
("Tempur-Pedic" or the "Company") (NYSE: TPX), the leading
manufacturer, marketer and distributor of premium mattresses and
pillows worldwide, and Sealy Corporation (NYSE: ZZ), a leading
global bedding manufacturer, today announced that they have signed
a definitive agreement to create a $2.7
billion global bedding provider.
The combination brings together two highly complementary
companies with iconic brands and significant opportunities for
global innovation and growth. Founded in 1992, Tempur-Pedic
is the leading manufacturer, marketer and distributor of premium
mattresses and pillows made from its proprietary
TEMPUR® pressure-relieving material in over 80 countries under
the Tempur® and Tempur-Pedic® brand names. Sealy, with roots dating
back to 1881 is a leader in the manufacturing and marketing of a
broad range of high quality mattresses and foundations with a
portfolio of well-known bedding brands, including Sealy®, Sealy
Posturepedic®, and Stearns & Foster®.
The transaction has been approved by the Boards of Directors of
both companies. Stockholders holding approximately 51% of Sealy's
outstanding common stock have executed a written consent approving
the transaction. No additional shareholder approvals are
required to complete the transaction. Tempur-Pedic will
acquire all of the outstanding common stock of Sealy for
$2.20 per share, representing a
premium of approximately 23 percent to Sealy's 30-day average
closing price on Wednesday, September 26,
2012. In addition, Tempur-Pedic will assume or
repay all of Sealy's outstanding convertible and non-convertible
debt, for a total transaction value of approximately $1.3 billion. The transaction, which is
subject to customary closing conditions, including regulatory
approvals, is expected to close during the first half of 2013.
Tempur-Pedic Chief Executive Officer Mark Sarvary commented, "This is a
transformational deal that brings together two great companies,
each with globally recognized brands. 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. In addition, our global
footprint will span over 80 countries. The shared know-how and
improved efficiencies of the combined company will result in
tremendous value for our consumers, retailers and
shareholders."
Tempur-Pedic and Sealy will operate independently. Larry Rogers, Chief Executive Officer of Sealy,
who has been with Sealy for 33 years, will remain CEO of Sealy and
report to Mr. Sarvary.
Sealy Chief Executive Officer Larry
Rogers, said, "The complementary product and market fit of
these two companies deliver a unique opportunity to create the
first full spectrum, global bedding company that addresses all
market segments and consumer preferences. Together, we believe that
we can deliver more value than either business could on its own by
leveraging our strong combined assets."
Strategic Rationale
Tempur-Pedic and Sealy have highly complementary products,
brands, technologies, and geographic footprints. Their combination
will provide significant opportunity for both entities to leverage
each other's capabilities to grow beyond their current footprints,
and to increase efficiencies across the entire supply chain.
- Comprehensive Portfolio of Iconic Brands.
Together, Tempur-Pedic and Sealy will have the strongest brand
portfolio in the industry with the most highly recognized brands
including Tempur®, Tempur-Pedic®, Sealy®, Sealy Posturepedic®, and
Stearns & Foster®. The combined company's brand portfolio will
have some of the best known brands in North America, South
America, Europe,
Asia and Australia.
- Complementary Product Offering. The
combination creates the most comprehensive suite of bedding
products available in the market. Sealy's strength and
expertise in innerspring and hybrid innerspring mattress
technologies fit seamlessly with Tempur-Pedic's position in
visco-elastic mattress, adjustable base and pillow technologies.
Further, the company will be able to invest more in R&D to
strengthen existing products as well as develop innovative new
offerings to better meet the needs and preferences of consumers and
retailers.
- A Truly Global Company. Tempur-Pedic and
Sealy have a highly complementary global footprint with
distribution in over 80 countries. The combination provides both
companies access to countries that represent future growth
opportunities. Tempur-Pedic has a strong presence around the world,
and particularly in North America,
Europe, and Asia while Sealy is represented in a
meaningful way in North America,
Argentina and Asia. The Sealy brand is also well-recognized
in many other key global markets through its international
licensees and joint ventures.
- Significant Shareholder Value Creation. The
combination is expected to be accretive in the first full year of
operations, with annual cost synergies from the combined operations
expected to be in excess of $40
million by the third year. These will be primarily realized
through purchasing, supply chain and increased efficiencies.
In addition, the combination has the potential for revenue
synergies as a result of a broader product offering and access to
more channels, including international expansion.
- Strong Financial Characteristics. Together,
Tempur-Pedic and Sealy had combined pro forma adjusted EBITDA of
$504 million based on the 12-months
ended June 30, 2012 for Tempur-Pedic
and May 27, 2012 for Sealy. The
combined company will have strong cash flow characteristics that
will enable rapid debt reduction and continued investment in growth
initiatives.
- Combination of Two Strong Management Teams.
The combination pairs two strong management teams with extensive
industry and global consumer products experience.
Tempur-Pedic and Sealy have a shared corporate culture focused on
consumer-driven product innovation to deliver the best quality of
sleep and building strong retailer relationships.
Tempur-Pedic intends to finance the acquisition through debt
financings, for which BofA Merrill Lynch has already provided
customary commitment letters.
BofA Merrill Lynch is acting as Tempur-Pedic's exclusive
financial advisor and Citigroup as lead financial advisor to Sealy.
Perella Weinberg Partners acted as the financial advisor and Blank
Rome LLP as the legal advisor to an independent committee of
Sealy's Board. Bingham McCutchen LLP is acting as legal advisor to
Tempur-Pedic and Simpson Thacher & Bartlett LLP as legal
advisor to Sealy.
Conference Call Information
There will be a live conference call to discuss the
proposed transaction today, September 27,
2012 at 8:00 a.m. Eastern
Time. The dial-in number for the conference call is
(877)303-6913. The dial-in number for international callers
is (224)357-2188. The call is also being webcast and can be
accessed on the investor relations section of both companies'
websites, http://www.tempurpedic.com or www.sealy.com. After the
conference call, a webcast replay will remain available on the
respective investor relations sections of both companies' website
for 30 days.
About Tempur-Pedic International
Tempur-Pedic International Inc. (NYSE: TPX) manufactures and
distributes mattresses and pillows made from its proprietary
TEMPUR® pressure-relieving material. It is the worldwide
leader in premium and specialty sleep. The company is focused on
developing, manufacturing and marketing advanced sleep surfaces
that help improve the quality of life for people around the world.
The company's products are currently sold in over 80 countries
under the TEMPUR® and Tempur-Pedic® brand names. World headquarters
for Tempur-Pedic International is in Lexington, KY. For more information, visit
http://www.tempurpedic.com or call 800-805-3635.
About Sealy
Sealy owns one of the largest bedding brands in the world,
with sales of $1.2 billion in fiscal
2011. The company manufactures and markets a broad range of
mattresses and foundations under the Sealy®, Sealy Posturepedic®,
Sealy Embody™, Optimum™ by Sealy Posturepedic®, Stearns &
Foster®, and Bassett® brands. Sealy operates 25 plants in
North America, and has the largest
market share and highest consumer awareness of any bedding brand on
the continent. In the United
States, Sealy sells its products to approximately 3,000
customers with more than 11,000 retail outlets. Sealy is also a
leading supplier to the hospitality industry. For more information,
please visit www.sealy.com.
Forward-looking Statements
This release contains "forward-looking statements," within
the meaning of federal securities laws, which include information
concerning one or more of Tempur-Pedic's or Sealy's plans,
objectives, goals, strategies, and other information that is not
historical information. When used in this release, the words
"estimates," "expects," "anticipates," "projects," "plans,"
"intends," "believes," and variations of such words or similar
expressions are intended to identify forward-looking statements.
These forward-looking statements include, without limitation,
statements relating to Tempur-Pedic's or Sealy's expectations
regarding the opportunities and strengths of the combined company,
anticipated cost and revenue synergies, the strategic rationale for
the combination, including expectations regarding product
offerings, growth opportunities, value creation, and financial
strength, and the timing of the closing. All forward looking
statements are based upon current expectations and beliefs and
various assumptions. There can be no assurance that Tempur-Pedic or
Sealy will realize these expectations or that these beliefs will
prove correct.
There are a number of risks and uncertainties that could cause
actual results to differ materially from the forward-looking
statements contained in this release. Numerous factors, many of
which are beyond Tempur-Pedic's or Sealy's control, could cause
actual results to differ materially from those expressed as
forward-looking statements. These risk factors include the ability
of the parties to complete the proposed merger in a timely manner
or at all; satisfaction of the conditions precedent to the proposed
merger, including the ability to secure regulatory approvals; the
possibility of litigation (including relating to the merger
itself); successful completion of acquisition financing
arrangements; the ability to successfully integrate Sealy into
Tempur-Pedic's operations and realize synergies from the proposed
transaction; general economic, financial and industry conditions,
particularly in the retail sector, as well as consumer confidence
and the availability of consumer financing; uncertainties arising
from global events; the effects of changes in foreign exchange
rates on the combined company's reported earnings; consumer
acceptance of the combined company's products; industry
competition; the efficiency and effectiveness of the combined
company's advertising campaigns and other marketing programs; the
combined company's ability to increase sales productivity within
existing retail accounts and to further penetrate the combined
company's domestic retail channel, including the timing of opening
or expanding within large retail accounts; the combined company's
ability to address issues in certain underperforming international
markets; the combined company's ability to continuously improve and
expand its product line, maintain efficient, timely and
cost-effective production and delivery of its products, and manage
its growth; changes in foreign tax rates, including the ability to
utilize tax loss carry forwards; rising commodity costs; and the
effect of future legislative, regulatory or tax changes. Additional
information concerning these and other risks and uncertainties are
discussed in each of the companies' respective filings with the
Securities and Exchange Commission, including without limitation
annual reports on Form 10-K under the headings "Special Note
Regarding Forward-Looking Statements" and/or "Risk Factors." Any
forward-looking statement speaks only as of the date on which it is
made, and neither the Company nor Sealy undertakes any obligation
to update any forward-looking statements for any reason, including
to reflect events or circumstances after the date on which such
statements are made or to reflect the occurrence of anticipated or
unanticipated events or circumstances.
Use of Non-GAAP Financial Measures
The Company and Sealy have presented the following non-GAAP
financial measures in this press release: adjusted EBITDA of each
of the Company and Sealy, and pro forma adjusted EBITDA and net
sales of the combined company. The Company and Sealy each define
its non-GAAP adjusted EPS to exclude the following: (i) interest
expense, net; (2) provision for income taxes; (3) depreciation and
amortization expense. Sealy also excludes certain unusual items and
other adjustments permitted in calculating its respective debt
covenants in its senior debt agreements. The reconciliation of
these historical non-GAAP measures to each of Tempur-Pedic's and
Sealy's GAAP financial measures for the periods presented are set
forth below.
The Company and Sealy believe the use of these non-GAAP
financial measures is useful to investors in comparing the results
of operations for comparable periods by eliminating certain of the
more significant effects of adjusted EBITDA. These measures also
reflect how the Company and Sealy manage their businesses
internally. In addition to the adjustments included in the
calculation of Sealy's non-GAAP adjusted EBITDA eliminates the
effects of financing, income taxes and the accounting effects of
capital spending and acquisitions. As with the items eliminated in
its calculation of non-GAAP adjusted EBITDA, these items may vary
for different companies for reasons unrelated to the overall
operating performance of a company's business. When analyzing
Tempur-Pedic's, Sealy's and the pro forma combined company's
operating performance, investors should not consider these non-GAAP
financial measures as a substitute for comparable measures in
accordance with GAAP.
|
Tempur-Pedic
|
|
Sealy
|
|
|
|
Twelve
Months ended
|
|
Twelve
Months ended
|
|
|
|
June
30, 2012
|
|
May 27,
2012
|
|
Pro
Forma Consolidated
|
EBITDA
|
|
|
|
|
|
GAAP Net
income (loss)
|
$
203,605
|
|
$
(5,695)
|
|
$
197,910
|
Interest
expense
|
14,996
|
|
88,994
|
|
103,990
|
Income
taxes
|
98,008
|
|
8,546
|
|
106,554
|
Depreciation & Amortization
|
51,737
|
|
24,172
|
|
75,909
|
|
|
|
|
|
|
EBITDA
|
$
368,346
|
|
$
116,017
|
|
$
484,363
|
|
|
|
|
|
|
Adjustments for debt covenants:
|
|
|
|
|
|
Refinancing charges
|
-
|
|
2,911
|
|
2,911
|
Non-cash
compensation
|
-
|
|
12,237
|
|
12,237
|
Discontinued operations
|
-
|
|
3,580
|
|
3,580
|
Other
|
-
|
|
1,112
|
|
1,112
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
368,346
|
|
$
135,857
|
|
$
504,203
|
SOURCE Tempur-Pedic International Inc.