Simmons Bedding has approved a prepackaged Chapter 11 bankruptcy restructuring plan that will result in the company's record sixth buyout. Through the deal the company will be acquired by Ares Management and Teachers' Private Capital for a total consideration of $760 million. Simmons' current owner, Thomas H. Lee Partners, will still see a profit on its $1.1 billion LBO investment as a result of the approximately $500 million of dividends it received. Simmons is the number two mattress U.S. manufacturer. Its brands include Beautyrest and ComforPedic. Ares and Teachers' currently own Serta International -- the restructuring of Simmons will make them the owners of the second and third largest mattress manufactures following the transaction.
Mattress companies have long been a favorite of private equity companies because of their stable growth and cash flows, allowing for significant leverage. In fact, 11 mattress companies have accounted for 23 buyouts totaling over $7.5 billion. The largest acquisition was the Kohlberg Kravis Roberts-led $2.2 billion LBO of Sealy in 2004. The downturn in the economy caught a number of these companies over-leveraged and has so far resulted in a few restructurings and now two bankruptcies. H.I.G. Capital and American Capital-backed Spring Air was the other mattress maker to file for bankruptcy.