Tempur-Pedic International Inc. is getting into bed with rival Sealy Corp. for $2.20 a share, the companies said Thursday.
Together, the mattress-makers will become a bedding giant worth $2.7 billion in an industry already crowded with competitors such as Serta Inc. and Simmons Bedding Co.
Lexington, Ky.-based Tempur-Pedic has been around since the early 1990s and is known for its pressure-relieving memory foam products, which according to the company are based on NASA technology designed for astronauts.
Sealy, founded in its namesake town in Texas and now based in Trinity, N.C., dates back to 1881 and is known for its spring-coil beds.
The sale price presents a 2.8% premium on Sealy’s $2.14-per-share Wednesday close, or about $229 million. Including Sealy’s outstanding convertible and non-convertible debt, which Tempur-Pedic will assume or repay, the total deal is valued at $1.3 billion.
Both company boards have approved the acquisition, along with shareholders with 51% of Sealy’s outstanding common stock. The deal, in which both Sealy and Tempur-Pedic will operate independently, is expected close in the first half of next year.
In morning trading in New York, Sealy stock was already up over its sale price, reaching $2.27 a share at one point. By early afternoon, Tempur-Pedic stock was up 17%, or $4.60, to $31.38 a share.
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