Serta Simmons May Buy Mattress Firm
This couple may need a California king if it’s going to get comfy together.
The buyout firm that owns Serta Simmons — the nation’s biggest mattress maker — is actively exploring a takeover bid for Mattress Firm, the nation’s dominant mattress retailer, The Post has learned.
Executives at Advent International are mulling the marriage because Mattress Firm is teetering on the edge of bankruptcy — a collapse that would slam Serta Simmons with massive losses, according to sources close to the situation.
Serta Simmons is Mattress Firm’s biggest supplier. Last year, it shelled out $100 million to launch a five-year marketing partnership with Mattress Firm and its 3,300 stores.
Likewise, if Mattress Firm were to file for bankruptcy, “Serta Simmons has to be in there for $100 million in receivables” that would go unpaid, a source close to the talks said, as Serta Simmons sells $50 million of beds monthly through the retailer.
Mattress Firm dropped Tempur Sealy last year in a contract dispute, and Serta Simmons believed it would be the beneficiary. Instead, “they found out Mattress Firm was poisonous,” the source said.
Mattress Firm’s owner, South Africa-based Steinhoff International, is reeling from an accounting scandal. During the past few weeks, its creditors have taken effective control of Steinhoff’s operations, according to sources.
“The word is they are trying to sell Mattress Firm,” the source said.
Under Steinhoff’s direction, Mattress Firm last year bought rival Sleepy’s for $780 million and quickly got rid of the Sleepy’s name, costing it Northeast customers. A few months ago, Mattress Firm introduced a Sleepy’s bedding line, but the damage was already done, sources said.
To make matters worse, Amazon has begun selling millions of cheaper, Chinese-manufactured beds, even as bed-in-a-box startups led by Casper continue to steal away business.
Steinhoff’s creditors would like to have a new owner backstop Mattress Firm’s losses, now running $200 million a year, a second source said. Steinhoff, which paid $2.6 billion for Mattress Firm in 2016, would likely sell it for not much more than $1 billion including the assumption of debt, the second source said.
Mattress Firm in recent months has lowered prices to gain lost revenue, a move that has squeezed profit margins, sources said. Advent would need to close at least one quarter of Mattress Firm’s stores to get the retail chain profitable, sources said, and that may be hard outside of a bankruptcy.
Besides Advent, private equity firm THL Partners has also expressed interest in buying Mattress Firm, the sources said.
THL in January 2017 bought furniture and mattress retailer Art Van Furniture. Since then, Art Van has acquired two more furniture retailers giving it a combined $1.3 billion in expected revenue.
A sale could be part of a prepackaged Mattress Firm bankruptcy, the sources said. Mattress Firm lenders include both those who loaned money directly to Mattress Firm, and those who are Steinhoff lenders. The two lending groups might need to be on the same page in a sale, the second source said.
Mattress Firm, Advent and THL spokespeople didn’t immediately respond to requests for comment on Wednesday.
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