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Grabbing a Pillow: Buyout Firms Agree to Acquire Tempur World

(The Wall Street Journal) - Two private-equity firms agreed to acquire Tempur World Inc., a maker of foam pillows and mattresses, from Fagerdala World Foams AB of Sweden for $350 million.

Under terms of the deal, which is expected to be announced today, TA Associates Inc., Boston, will invest $95 million in cash and $35 million in subordinated debt to fund the transaction. An additional $50 million cash investment will come from Friedman, Fleischer & Lowe, San Francisco, with the rest of the acquisition being financed with bank debt.

Robert B. Trussell Jr. will remain Chief Executive Officer of Tempur and will have an equity stake in the business. The deal is expected to close by early November.

Tempur, Lexington, KY., sells its pillows and mattresses under the brand names Tempur and Tempur-Pedic at retail chains and through direct marketing. Tempur has a sales agreement with specialty retailer Brookstone Inc. of Nashua, N.H., that 9% of its $250 million of sales last year. Just more than half of the company's revenue came from U.S. sales.

The buyout comes as Fagerdala's majority shareholders are looking to cash out of Tempur. Fagerdala's primary business is making polyethylene foams used for insulation and shock absorption in the automotive and athletic industries.

The pillow and mattress unit makes products from viscoelastic foam, a material developed by the National Aeronautics and Space Administration in 1971 for use in spacecraft seats to cushion astronauts during liftoff. Fagerdala improved the foam, which is temperature sensitive, allowing it to conform to better support the body. The company's viscoelatic-foam mattress, introduced in 1991, sells for about $1,000. Tempur's pillows are priced at about $100 each.