Ohio Mattress Board OKs Buyout Firm’s $980-Million Bid

CLEVELAND —  A buyout specialist Monday offered to buy Ohio Mattress Co., the world’s largest bedding maker and producer of Sealy Posturepedic and Stearns & Foster mattresses, in a deal valuing the company at nearly $1 billion.

“This is a great day for all our stockholders,” said Ernest M. Wuliger, chairman and chief executive of Ohio Mattress, which announced Nov. 18 that it had hired an investment banking firm to review a possible sale.

Gibbons, Green, van Amerongen, with offices in New York and Los Angeles, said it was offering $25.50 a share in cash for 96%, or 36.9 million, of Ohio Mattress’ shares. The remaining shares would be exchanged later for shares in the new company.

The tender offer alone would cost $940 million. The value of the whole company implied by the price of $25.50 a share is $980 million. The tender offer is dependent on obtaining at least 51% of Ohio Mattress’ shares.

Harvey Katz, an industry analyst with Salomon Bros. in New York, said the news of the bid was “no big surprise” given the Ohio Mattress announcement last fall that it was reviewing its possible sale options.

“The price being offered would seem to be a done deal and reasonably close to full value,” Katz said.

He said it was unlikely that Gibbons Green would attempt to sell off much of Ohio Mattress to pay off the takeover debt, noting that most of the company’s operations reflected its core bedding business. Any non-bedding operations would be relatively small, he said.

E. Stephen Benson, a partner in the investment firm, said the firm was attracted to Ohio Mattress by its market share, its opportunity for international growth and plans for direct home delivery by Ohio Mattress of products sold by retailers.

“We think we can run the company more efficiently,” Benson said by phone from New York.

Europe’s largest bedding manufacturer, Madrid-based F. L. Betere S. A. (Flex Group), plans to take a minority participation role in the new company, according to Benson. The percentage ownership it will have was not disclosed.

Received Six Offers

“We believe such an international strategic alliance, coupled with domestic opportunities we see for the company to develop its home delivery business, as one example, will enable management to generate an accelerated and even more profitable rate of growth in the years ahead,” Benson said.

Ohio Mattress said it received six acquisition offers last Wednesday, three of which were subsequently improved. The other bidders were not disclosed.

The Gibbons Green offer “was selected by Ohio Mattress’ board following its determination that the offer represented the best available transaction for the Ohio Mattress stockholders,” the company said in a statement.

The tender offer is expected to begin Friday, Ohio Mattress said.

Gibbons Green said it has financing commitments from the First National Bank of Chicago. The entire offer will be financed with funds from First National Bank of Chicago and its own equity funds, Gibbons Green said.

Wuliger said he had been asked by Gibbons Green to remain as chairman and become an investor in the subsidiary company.

For the fiscal year ended Nov. 30, Ohio Mattress had sales of $661.5 million and profit of $33.2 million. Ohio Mattress has 5,555 employees at locations around the nation, Wuliger said.

The acquisition would be the 29th by Gibbons Green, which was founded in 1969 and acts as general partner in three equity buyout funds on behalf of banks, insurance companies, pension funds and university endowments. Its previous acquisitions include Coca-Cola Bottling of New York, Purex, Ekco Housewares, Rival Manufacturing and Budget Rent-a-Car.