(The Daily Deal) - TA Associates and Friedman, Fleisher & Lowe are teaming up to acquire Tempur World Inc., a Lexingtion, KY-based mattress and pillow maker, in a $350 million leveraged recapitalization.
The two private equity firm said Friday that they had signed a definitive agreement to purchase Tempur from Fagerdala World Foams AB of Gustavsberg, Sweden, a producer of polymer foams.
TA Associates, a Boston buyout firm, plans to invest $95 million in convertible preferred equity and will own a majority of Tempur, according to P. Andrews McLane, a TA senior managing director. In addition, TA will invest $35 million in subordinated debt and warrants.
Friedman, Fleisher, a San Francisco private equity shop, will supply $50 million of convertible preferred funding. A mezzanine debt fund managed by Gleacher & Co. LLC will kick in another $15 million.
The rest of the financing, $150 million of funded senior debt and a revolving credit facility ($20 million of which will be untapped at the deal's closing), will come from GE Capital Corp.
Avalon Group, a New York M&A boutique, advised Tempur, as did the law firms Frost, Brown, Todd LLC of Lexington, KY, and Sidley, Austin, Brown & Wood LLP, New York. The buyers turned to Bingham McCutchen LLP for counsel.
McLane, who wouldn't disclose Tempur's cash flows, said the $250 million revenue company fits the growth profile TA seeks. "We only do so-called growth buyouts," he said. "This company has been growing at better than 20% a year for the past three years. Other mattress and pillow makers don't grow at that rate."
Geographic expansion and aggressive marketing have combined to spur the increase in sales. In the U.S., which accounted for just over half of Tempur's 2001 sales, the company sells its Tempur-Pedic brand bedding through specialty retailers.
"Myself, I don't especially like the mattress," McLane said. "But two of my sons think the pillows are great, and my mother has been sleeping on a Tempur-Pedic mattress for years. Bedding is a matter of personal choice, and a lot of people are Tempur-Pedic fans."