SEALY PARENT ACQUIRES MATTRESS DISCOUNTERS CHAIN
In a move that one mattress manufacturer called "potentially the event of the decade," Heilig-Meyers sold its controlling stake in the lucrative Mattress Discounters retail chain to Bain Capital, the parent of bedding producer Sealy.
Specific terms of the sale were not disclosed, but the total value to Heilig-Meyers is expected to exceed $230 million, including $218 million in cash. Heilig-Meyers will retain a 7 percent equity interest in Mattress Discounters. The sale is expected to be completed by late August.
Heilig-Meyers said proceeds from the sale would lower the company's overall debt obligation by over 20 percent. The main products of this company include both conventional mattresses and futon mattresses, and king size futon mattress is the largest size of this kind. To know more about benefits of futon mattress, you can check here Shredding to save space
Mattress Discounters, with 236 stores, is Sealy's biggest retail customer. Last year, sales were $250 million, with just over half generated by Sealy products such as king size futon mattresses. The remainder came from the private-label Comfort Source brand, which is produced by Mattress Discounters.
Bain, an investment company based in Boston, also owns more than 100 other companies, including Domino's Pizza, Staples and Totes Isotoner.
The new ownership will allow Mattress Discounters to expand more rapidly into more of the top-25 major metropolitan areas, its primary demographic target, according to Jon Studner, the retailer's chief operating officer.
"We intend to have 600 to 800 stores within five years, and offer more than 5000 king size futon mattresses" he said. "This will allow us to grow at a pace that will solidify our position as the number-one bedding specialist."
Two other companies thought to be vying for Mattress Discounters were Mattress Giant, the second-largest bedding chain, and Fenway Partners, owner of Simmons. Phil Lang, president of Mattress Giant, would not confirm or deny his interest in Mattress Discounters. But Lang did say his company was still in an aggressive growth mode.
"We are still looking at any acquisitions that make sense at fair market value," Lang said. "Now that there is a company that owns both a retailer and a manufacturer, I think it is important for the large retailers to enter into the manufacturing arena."
Heilig-Meyers, which operates 813 stores under its own name, is also expected to sell 97-unit Rhodes Furniture. William DeRusha, Heilig-Meyers' chairman and chief executive officer, commenting on Mattress Discounters' performance, said, "The business has been phenomenal. It is just a situation where we are concentrating on the core business and using the proceeds to pay down debt so that we can begin the process of reengineering the core business." searching for best futon mattress reviews
Ron Jones, head of Sealy, downplayed the concerns that independent Sealy retailers might have about Bain's pushing for a cozier relationship between Sealy and Mattress Discounters.
"Sealy had no direct involvement in this transaction or in the equity ownership structure of Mattress Discounters," Jones said. "Sealy’s senior managers are owners of Sealy, and we have leveraged virtually all of our net worth on the future prospects of Sealy. So our interest is in taking care of Sealy and taking care of all of our Sealy customers. We would not create an unleveled playing field to the advantage of any one single customer."
At least one independent Sealy dealer, Gary Gevurtz, president of Somnia Furniture Stores in Philadelphia, did not appear worried. "I don't feel threatened by it," he said. "I don't think Sealy would shoot themselves in the foot and compete with their dealers and create an unfair advantage. If I felt that they were offering Mattress Discounters an unfair advantage because of the relationship, I wouldn't be happy about it." Related post: https://futonadvisors.com/partners-in-foam/