Chasing a Tiger

Inside Tempur-Pedic’s multiyear bid to acquire Sealy, bringing two of the best bedding businesses under one roof

Lou Jones, Tempur-Pedic’s executive vice president, general counsel, and secretary, ran oversight during the company’s acquisition of Sealy. Fortunately, she had a stellar legal team on both sides helping guarantee compliance with the FTC.

Tempur-Pedic International Inc. and Sealy Corporation made history last March, with the official announcement that the companies were joining forces. Lou Jones, Tempur-Pedic’s executive vice president, general counsel, and secretary, played a key role in the process. Here, she shares how she guided her team to catch a tiger that had long been on her horizon, one that might change forever how all of us sleep.

QuoteTempur Sealy International, Inc. will be the industry innovator. If there is a way to find a better, smarter, more forward-looking way to provide the best night’s sleep possible to our customers, you can bet we’ll be the ones that bring it to the market. Since the announcement of the merger between Tempur-Pedic and Sealy Corporation, the combination has been called transformational, and we believe it will benefit the millions of customers who buy our products, the thousands of retailers who sell them, and the industry in general.

Mark Sarvary, Tempur-Pedic’s CEO, was convinced that a Sealy acquisition made the most sense for us. The portfolios were completely compatible. His idea of combining the two best brands in the mattress world is now a reality. Both companies have significant research-and-development teams, [which are] essential to combine [in order to] advance the complimentary technologies. For the last few decades, Tempur-Pedic and Sealy have been the innovators in the industry, and we’re going to continue that trend. With Sealy’s expertise in springs and Tempur-Pedic’s expertise in foam beds, we now have the best of both worlds.

The acquisition was a protracted process. It required months of due diligence and vetting of the Sealy business and hundreds of hours of legal negotiations on the financing and merger documents. The regulatory hurdles were significant and involved an intense period of scrutiny by the FTC [Federal Trade Commission].

Antitrust compliance took a lot of time and effort, and was the most stressful aspect of the deal. Our lead antitrust lawyers, Bill Berkowitz, from Bingham McCutchen LLP, and Sealy’s Simpson Thatcher & Bartlett LLP lawyer, Joe Tringali, were remarkable, as were the legal deal teams. It was a very collegial transaction between the parties and the lawyers. Everyone was working toward a common goal, and we knew we were doing something special. At the end, it felt like we had been chasing this huge tiger and we finally caught it by the tail. But what we realized was, after all the work we had done, the real work was ahead of us. This was just the beginning.

The combination of companies will improve our bottom line by providing more purchasing power. It gives us the ability to realize savings through the elimination of redundant services. In terms of benefiting retailers, customers, and the industry, we believe it increases our expertise, allows us to provide more and better services, fuels innovation, and will bring more customers to retailers’ stores.

Mark hired me to build the legal department at Tempur-Pedic. I love the company; it’s a very dynamic environment. Barry Hytinen, our SVP, global business development, led the merger effort. My role was one of counseling, advising, and providing oversight and review on the legal side. I had two lawyers in the United States and one in international, and added three from Sealy, all welcome additions. One of the main things that I think shapes my practice, in large part, is the kind of client Tempur-Pedic is: Tempur-Pedic is a company that wants to do the right thing in every aspect of its business, and that’s a lawyer’s dream! Everyone works to ensure we are in compliance with our legal obligations. It’s a blessing to have a client like that.

“Tempur-Pedic is a company that wants to do the right thing in every aspect of its business, and that’s a lawyer’s dream!” —Lou Jones

The acquisition was a huge deal that doubled the size of our company and put us in a position to do great things for the industry and our customers. Our name officially changed on May 22, 2013 to Tempur Sealy International, Inc. We think this will send a message to the industry that this is a combination of equals: two iconic brands, each of whom has a great history of its own.

Tempur-Pedic has been around for 20 years and Sealy has been in business since the 1880s, and we want to capitalize on that and be the most successful bedding company in the world. In January, Tempur-Choice, Tempur-Pedic’s first product providing adjustable comfort, was launched alongside Sealy’s new Posturepedic. Both brands are all about new technologies, so stay tuned.

My experience has taught me that you need to be deeply embedded in your company’s business in order to provide the kind of legal advice that propels the company forward. Being involved in the business includes visiting stores and plants. You have to know what happens at the customer and manufacturing levels in order to properly advise your client. I require not only technical legal excellence in a lawyer, but exceptionally good commercial judgment and a strong business mentality. On my team, you need to be a business partner, not just a lawyer. Quote