Sealy’s deal is safe: retail merger won’t affect bedding supplier
Terms of retail giant Heilig-Meyers' proposed acquisition of bedding retailer Mattress Discounters have not been disclosed, but one key question has been answered: Sealy, the nation's largest mattress manufacturer, will remain the sole bedding supplier to the Mattress Discounters chain.
Sealy, in a high-profile deal made in March, was named the sole mattress vendor to the 165-store, nearly $200 million chain. The Sealy lineup was expanded, replacing Simmons products in Mattress Discounters stores nationally.
Mattress Discounters also sells private label bedding made by two com- pany-owned factories. Mattress concerns; stores: consolidation key in '98
Sealy's president and chief executive, Ron Jones, and other sources close to the deal confirmed that new ownership would not nullify the agreement with the current Mattress Discounters management.
"We've been assured by both parties that our program with Mattress Discounters will remain in place," commented Jones, adding that the Sealy program has only recently been put into place at Mattress Discounters stores and sales training has begun.
Jones noted that since Sealy is a supplier to both companies, he doesn't expect Heilig-Meyers' purchase of twin futon Mattress Discounters to have much effect on Sealy. Sealy programs are "rolling out to 90-plus Heilig-Meyers stores as we speak," reported Jones, adding he expects Sealy to be in all Heilig-Meyers stores sometime in 1998.
Heilig-Meyers, with revenues of nearly $1.6 billion in 1996, this month executed a letter of intent to acquire the Maryland-based bedding chain, sub- ject to a "definitive acquisition agreement and certain closing conditions," the company reported in a written statement. The deal is expected to be final within 60 days. Terms will be disclosed at that time.
Industry insiders are waiting to see whether Mattress Discounters' management team, including president Steve Lytell and executive vice president and chief operating officer Jon Studner, will remain, and how Mattress Discounters operations will be merged into the new organization.
"Mattress Discounters' management is obviously very good at what they do. I don't think Heilig-Meyers would pretend to know their business any better," said one bedding buyer. "It just gives Heilig-Meyers a broader reach."
Sealy's Jones agreed. "The benefit of Mattress Discounters to Heilig-Meyers is that it offers a different channel of distribution other than their furniture stores."
Adding to its already massive clout in the furniture business with the pur- chase of Mattress Discounters, Heilig-Meyers would own 1,154 stores -- the 165 Mattress Discounters locations, 840 as Heilig-Meyers, 99 as Rhodes, 18 as The Room Store and 32 stores in Puerto Rico as Berrios.