(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."

(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.

(New York Business Forums Conference Center) - Avalon Group, Ltd. has joined with the New York Business Forums to create Consumer Business Investing a forum being held on Tuesday, September 24th from 3:30 to 6:30 p.m. where companies and their clients can meet premier investors interested in consumer businesses. The forum will explore the current placement environment and the ability to obtain private placement financing for growth or obtain liquidity by selling a controlling interest in their company.

Avalon's Chief Executives, Lynda Davey, will be joined by some of the most active institutional principals investing in consumer businesses. Speakers will include David Landau, General Partner of Apax Partners Inc., Steven Segal, Senior Managing Director of J.W. Childs Associates LP, and David Yarnell, Managing General Partner of BEV Capital as well as other prominent investors and experts in the field. The program will cover topics ranging from:

what companies should consider when thinking about private financing
special hurdles required to obtain private placement funds
what investors believe makes a successful investment
what investors look for in consumer business companies
These successful investors will also share their views about management teams, approaches to compensation and ownership, and where they find resources for consumer business companies. There will be several Q&A sessions as well as informal one-on-one discussions where one can get acquainted with other investors who are looking to invest in consumer businesses.

We are confident consumer business companies and their clients will find this event a unique and valuable opportunity to learn more about the current market for private placements in the consumer industry.