KKR makes quick $153 million with Sealy IPO

After paying $436 million in equity to buy the world’s largest mattress company in 2004, the New York-based firm will maintain a post-IPO majority stake in the company valued at $810 million.

Bedding Products maker Sealy Corp. went public yesterday in an IPO offering 28 million shares of common stock at a price of $16.00 per share. The shares began trading today on the New York Stock Exchange under the ticker symbol “ZZ”.

Twenty million of the shares are coming from the company, and 8 million are coming from selling shareholders. North Carolina-based Sealy is expected to receive net proceeds of about $295 million (€244 million) from the transaction.

Kohlberg Kravis Roberts, the majority owner of the company, will receive $100 million of the $125 million special dividend paid to existing shareholders. KKR will also receive $11 million as a payment to terminate its management agreement with Sealy.

KKR bought Sealy in March 2004 from a group including Bain Capital, Charlesbank Capital Partners, JP Morgan Partners, CIBC Argosy Merchant Fund and BancBoston Capital for $1.5 billion. KKR reportedly paid $436 million in equity. At $16.00 per share, the IPO price is more than double the $5.78 a share that KKR paid in 2004.

KKR will maintain a majority stake in the 90,748,404 shares outstanding, valued at nearly $810 million.

KKR purchased Sealy at a time when a number of private equity firms were purchasing mattress companies, including Thomas H. Lee Partners’ purchase of Simmons and Investcorp’s purchase of Swedish mattress maker Hilding Anders. Private equity firms have often looked at mattress companies as an area of stable profit, as demand tends not to fluctuate.