Tempur-Pedic to buy mattress rival Sealy

Mattress rivals Tempur-Pedic and Sealy are becoming bedfellows.

Tempur-Pedic, the 20-year-old leader in foam mattresses, is buying 131-year-old rival Sealy for about $228.6 million in cash.

The acquisition comes as competition has increased in the mattress industry, with makers stepping up their marketing and promotions to help lure cost-conscious consumers into making big purchases.

Tempur-Pedic International Inc. said Thursday that it will pay $2.20 per Sealy share, which is a 3 percent premium to the company's Wednesday closing price of $2.14.

Sealy, based in Trinity, N.C., currently has about 103.9 million outstanding shares, according to FactSet. Its stock was up 5 cents, or 2.34 percent, to $2.19 per share in heavy trading Thursday. Volume of more than 27.9 million shares was more than 38 times normal trading in the stock.

Tempur-Pedic says it will also assume or pay back all of Sealy Corp.'s outstanding debt. The Lexington, Ky., company plans to finance the acquisition with debt. Its shares soared $3.86, or 14.41 percent, to close at $30.64, with volume more than seven times normal trading.

The companies put the total value of the deal at $1.3 billion, including debt. They say that the transaction will create a $2.7-billion global bedding company.

"Tempur-Pedic and Sealy together will have products for almost every consumer preference and price point, distribution through all key channels, in-house expertise on most key bedding technologies, and a world-class research and development team," Tempur-Pedic chief executive Mark Sarvary said in a statement.

Tempur-Pedic and Sealy will run independently of each other, with Sealy chief executive Larry Rogers remaining in his position and reporting to Sarvary.

Tempur-Pedic, founded in 1992, makes and distributes mattresses and pillows in more than 80 countries under its Tempur and Tempur-Pedic brands. Sealy, founded in 1881, makes a broad array of spring-coil beds under brands including Stearns & Foster, Sealy, and Sealy Posturepedic.