Two fellow mattress rivals have decided to team up in order to dominate the industry.
Announced on September 27th, global memory foam pillows and mattress maker Tempur-Pedic
is planning on purchasing rival company Sealy in an agreement revolving around $1.3 billion.
With this agreement, Tempur-Pedic plans on repaying all of Sealy’s outstanding debt, which is
currently around $750 million.
With news of this deal stating that everything should close around the first half of 2013, Tempur-
Pedic stock prices soared.
This deal has come along as current competition within the pillow and mattress industry heats
up, as large manufacturers have been releasing many deals over the past year in order to bring in
price-conscious customers.
Regaining Market Share
With their purchase of Sealy, Tempur-Pedic, who has exploded in growth and popularity within
these past few years because of their memory foam technology created by NASA, hopes to pick
up additional market share as they compete against rivals in a battle of who has the best pillows
and mattresses within the industry.
In June of 2012, the value of Tempur-Pedic fell to around $1.5 billion, which was half of what it
was valued at previously, because of a reduction in full-year forecast predictions. This reduction
in value was partially blamed on the popularity of mattress makers like Serta and Simmons
Bedding.
What The Future Holds
Despite Tempur-Pedic dominating the niche side of the pillow and mattress world with its
popular foam brands, it’s important to remember that this is a small share of the whole pie. With
this new deal with Sealy, who has dominated the mattress industry for quite some time, Tempur-
Pedic will be present in over 80 different countries around the world and should save more than
$40 million in costs over the next 3 years.
Although Tempur-Pedic is very popular throughout North America, Asia, and Europe, Sealy has
strong ties to Argentina, North America, and Asia. Combined, these two mattress giants are set
to become the largest bedding company in the world. Analysts claim that combined revenue for
2012 will hover between $2.8 and $3.1 billion.
Until the deal finally closes in 2013, each company will continue to operate and run things
separately. Despite Sealy being one of the biggest companies in the industry, they recently
announced that they broke even during the third quarter, which ended on August 26th. Compared
to only a $6.6 million profit during the same period in 2011, this is an excellent acquisition that
allows them to get rid of their debt and work with Tempur-Pedic to boost revenues in many
different niche markets.
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