Sealy Corporation

History

In 1881, cotton gin builder Daniel Haynes lived in Sealy, Texas, located west of Houston. Haynes began making cotton-filled mattresses for his friends and neighbors. In 1889, he patented an invention that compressed cotton for use in his mattresses. Eventually the mattresses became so popular he was able to sell the patents to manufacturers in other markets. The term "Mattress from Sealy" was coined to describe what was produced.

During 1906, after much success as an advertising executive, Earl Edwards purchased the patents and gained manufacturing knowledge from Haynes. Edwards took the name "Sealy" for his new company and expanded it to a national market.

Due to lack of funding for manufacturing, Sealy expanded using a licensing-expansion similar to Coca-Cola. By 1920, Sealy had 28 licensed plants and became the first mattress company to expand using a licensing program.

During the Great Depression the mattress industry was hit hard. Sealy lost most of its licensees and narrowly escaped bankruptcy itself. During this time Sealy consolidated with the surviving licensees and created what is now known as Sealy, Incorporated.

Sealy operated as a franchisor out of its Chicago headquarters and its licensees were, under the terms of their licensing agreement, only supposed to sell in a designated trading area that did not conflict with other franchisees. The largest licensee, Cleveland-based Ohio Mattress Company (founded by the Wuliger family and still operated by Ernest M. Wuliger), defied these restrictions and sold into markets reserved for other franchisees. The conflict resulted in Ohio Mattress filing an antitrust suit against Sealy in 1971. The issue was decided fifteen years later with a near-total victory for Ohio Mattress. Unable to come up with the $77m award, Sealy Incorporated and all but one of the other franchisees were forced to sell to Ohio Mattress, and the company became the world's largest bedding manufacturer by sales.

Merchant banking firm Gibbons Green Van Amerongen took Sealy private in an April 1989 leveraged buyout, a deal which netted Sealy shareholders US$965m. First Boston made a bridge loan to the buy-out firm just as Drexel Burnham Lambert was running into trouble and the junk bond market was drying up, and was stuck with the loan. The failed deal, known as "burning bed," led to a dramatic slow-down in leveraged buy-outs. Gibbons Green dissolved and First Boston was forced into the arms of Credit Suisse.

In 1990 Ohio Mattress assumed the Sealy name that it had acquired when it purchased Sealy Inc. In 1998 Sealy announced that it was moving from Cleveland to the High Point, NC, area.

Bain Capital and a team of Sealy's senior executives acquired the company in 1997. In 2004, the company was acquired by Kohlberg Kravis Roberts & Co. and a team of Sealy management. The deal was valued at $1.5 billion but included significant debt. The company operated as a privately held corporation until 2005. On June 30 of that year, it announced an initial public offering of common stock. The company said proceeds from the IPO would go to paying down debt, funding global operations and paying private equity firm Kohlberg Kravis Roberts to “terminate our future obligations under our management services agreement.”

In September, 2012, Tempur-Pedic International (TPX) announced an agreement to purchase Sealy (NTSE:ZZ) for about US$229 million.

Sealy's corporate headquarters are located in Trinity, NC. Although Sealy's website claims that they are the largest manufacturer of mattresses in the world, Tempur-Pedic had greater revenue than Sealy in 2011. Sealy has 25 U.S. plants and a 17.8 percent share of the nation's mattress sales. Sealy sells the majority of its mattresses under its three main brands, Sealy Posturepedic, Stearns & Foster and Bassett.

Overseas markets

There are licensees operating in Australia, Argentina, Bahamas, Colombia, Israel, Jamaica, Japan, New Zealand, South Africa, Thailand and the United Kingdom.