(Reuters) – Advent International has agreed to buy a majority stake in AOT Bedding Super Holdings, the parent company of Serta mattress maker National Bedding and Simmons Bedding, the private equity firm said on Sunday.
Terms of the deal were not disclosed, but people familiar with the matter said the transaction valued AOT at about $3 billion, including debt.
The transaction, expected to be completed by the fourth quarter, illustrates robust appetite for secondary buyouts, or sales from one private equity firm to another. The industry is flush with capital it is looking to put to work while the market for initial public offerings remains choppy.
Current investors in AOT are Ares Management LLC and the Ontario Teachers’ Pension Plan, which will retain a minority equity stake after the transaction.
Keeping a minority stake allows the current owners to benefit from AOT’s additional growth potential while locking in some profits from their initial investment seven years ago.
Ares and Ontario Teachers bought National Bedding in 2005 for an undisclosed sum and five years later added Simmons Bedding, which they bought out of bankruptcy from U.S. buyout house Thomas H. Lee Partners for around $760 million.
After that deal was completed, the two manufacturers were grouped under a newly created holding company named AOT Bedding Super Holdings.
In the latest deal, Advent prevailed over other private equity bidders such as Bain Capital and Berkshire Partners, according to one of the sources.
All parties declined to comment on the deal’s value. The sources familiar with the deal requested anonymity because the matter is not public.
The private equity owners pursued a sale rather than an IPO to take advantage of a strong leveraged financing market, according to one of the people familiar with the matter.
National Bedding is the largest licensee and majority shareholder of Serta, with 18 factories in the United States and two in Canada. Atlanta-based Simmons Bedding is one of the world’s largest mattress producers and the maker of the Beautyrest brand.
Barclays acted as lead financial adviser, while Deutsche Bank Securities and Morgan Stanley were co-advisers to AOT Bedding Super Holdings.
(By Soyoung Kim)
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