Tempur-Pedic will also assume or repay all of Sealy's outstanding debt and the deal, which is expected to close in the first half of 2013, is valued at $1.3 billion. The companies will continue to operate independently.
Shares in the Lexington, Ky.-based Tempur-Pedic skyrocketed in morning trading, up more than 15% at one point, as investors seemed to like the deal. Trinity, N.C.-based Sealy has roots dating back to 1881. Tempur-Pedic was founded in 1992. The combined company will be a $2.7 billion global bedding provider with a presence in more than 80 countries, according to the press release. Sealy had sales of $1.2 billion in fiscal 2011.
The companies believe a complementary product mix, great brands, and synergies will all contribute to shareholder value.
Tempur-Pedic will finance the acquisition through debt.
The Motley Fool owns shares of Tempur-Pedic International. The Motley Fool has a disclosure policy.
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