Tempur-Pedic to acquire bedding manufacturer Sealy Corp

Tempur-Pedic and Sealy have highly complementary products, brands, technologies, and geographic footprints. Their combination will provide significant opportunity for both entities to leverage each other's capabilities to grow beyond their current footprints, and to increase efficiencies across the entire supply chain.

• Comprehensive Portfolio of Iconic Brands.  Together, Tempur-Pedic and Sealy will have the strongest brand portfolio in the industry with the most highly recognized brands including Tempur, Tempur-Pedic, Sealy, Sealy Posturepedic, and Stearns & Foster. The combined company's brand portfolio will have some of the best known brands in North America, South America, Europe, Asia and Australia.
• Complementary Product Offering.  The combination creates the most comprehensive suite of bedding products available in the market.  Sealy's strength and expertise in innerspring and hybrid innerspring mattress technologies fit seamlessly with Tempur-Pedic's position in visco-elastic mattress, adjustable base and pillow technologies. Further, the company will be able to invest more in R&D to strengthen existing products as well as develop innovative new offerings to better meet the needs and preferences of consumers and retailers.
• A Truly Global Company.  Tempur-Pedic and Sealy have a highly complementary global footprint with distribution in over 80 countries. The combination provides both companies access to countries that represent future growth opportunities. Tempur-Pedic has a strong presence around the world, and particularly in North America, Europe, and Asia while Sealy is represented in a meaningful way in North America, Argentina and Asia. The Sealy brand is also well-recognized in many other key global markets through its international licensees and joint ventures.
• Significant Shareholder Value Creation.  The combination is expected to be accretive in the first full year of operations, with annual cost synergies from the combined operations expected to be in excess of $40 million by the third year. These will be primarily realized through purchasing, supply chain and increased efficiencies.  In addition, the combination has the potential for revenue synergies as a result of a broader product offering and access to more channels, including international expansion.
• Strong Financial Characteristics.  Together, Tempur-Pedic and Sealy had combined pro forma adjusted EBITDA of $504 million based on the 12-months ended June 30, 2012 for Tempur-Pedic and May 27, 2012 for Sealy.  The combined company will have strong cash flow characteristics that will enable rapid debt reduction and continued investment in growth initiatives.
• Combination of Two Strong Management Teams.  The combination pairs two strong management teams with extensive industry and global consumer products experience.  Tempur-Pedic and Sealy have a shared corporate culture focused on consumer-driven product innovation to deliver the best quality of sleep and building strong retailer relationships. 

Tempur-Pedic intends to finance the acquisition through debt financings, for which BofA Merrill Lynch has already provided customary commitment letters. 

BofA Merrill Lynch is acting as Tempur-Pedic's exclusive financial advisor and Citigroup as lead financial advisor to Sealy. Perella Weinberg Partners acted as the financial advisor and Blank Rome LLP as the legal advisor to an independent committee of Sealy's Board. Bingham McCutchen LLP is acting as legal advisor to Tempur-Pedic and Simpson Thacher & Bartlett LLP as legal advisor to Sealy. 

Tempur-Pedic International Inc.