Serta mattress maker National Bedding Co. is exploring a sale by its private equity owners, Ares Management LLC and the Ontario Teachers’ Pension Plan Board, said people familiar with the transaction.
Barclays Plc is providing advice on a possible transaction, said the people, who declined to be identified as deliberations are private. The process is in early stages and no information is out yet for potential bidders, the people said.
Ares and Teachers’ are seeking as much as $3 billion for National Bedding, and probably will try to sell the mattress maker to buyout firms, said one of these people. Their buyout divisions took over National Bedding, then the largest maker of Serta brand mattresses in North America, in 2005 for an undisclosed sum.
Less than five years later, the firms added the Simmons brand to their mattress holdings, acquiring Simmons Bedding Co. out of bankruptcy from then-parent Thomas H. Lee Partners LP for about $760 million.
Fellow mattress company Tempur-Pedic International Inc. (TPX), based in Lexington, Kentucky, reduced forecasts yesterday for profit and revenue as competition intensifies. Last year, the company was the largest publicly traded mattress maker by revenue, based on its $1.42 billion in sales. Sealy Corp. (ZZ) was No. 2 with sales of $1.23 billion.
Tempur-Pedic shares have slumped 73 percent over seven weeks -- including a record 49 percent decline yesterday -- wiping almost $3.9 billion off the company’s market value.
Manufacturers have introduced specialty lines in the past year to compete with Tempur-Pedic and capitalize on the demand for products linked to healthier sleep, according to Jessica Schoen, an analyst at Barclays in New York. The specialty segment, consisting of mattresses that don’t have the traditional inner-spring construction, is the fastest-growing in the industry, she said in an interview.
U.S. shipments of non-inner-spring mattresses, which includes memory-foam products, jumped 24 percent to 2.7 million units last year over 2010, according to the International Sleep Products Association, based in Alexandria, Virginia. Inner- spring mattress shipments slipped 1.9 percent to 16.8 million units.
Spokesmen for Barclays and Ares declined to comment, as did a Teachers’ spokeswoman.
Ares Management, based in Los Angeles, manages about $6 billion in committed capital through its private equity funds, according to its website. Its investments range from stakes in Marietta Corp., the maker of travel hygiene kits, to GNC Holdings Inc. (GNC), the nutrition supplement retailer also co-owned by Teachers’. Canada’s third-largest retirement fund manager also holds stakes in companies such as Internet security software maker Blue Coat Systems Inc.
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