Top Biz News

Chinese white knight to save Simmons

By Bao Chang and Lu Haoting (China Daily)
Updated: 2009-12-25 08:02

Troubled US mattress maker Simmons Bedding Company is all set to find a new white knight in China after a chequered 139-year existence in which it saw six different owners.

Three private Chinese companies are believed to have shown interest in bidding for assets of Simmons, one of the world's largest mattress manufacturers with annual sales of $850 million.

The assets of the US company were put on sale at the Guangzhou Enterprises Mergers and Acquisitions Services (GEMAS) on Dec 17.

Two Chinese furniture producers from Guangdong province and a bedding company from Shanghai may bid for the assets, Duan Li, the head of the Simmons project at GEMAS, told China Daily yesterday. But he declined to reveal the names of the firms.

"Simmons has a strong brand influence in China and would be an ideal candidate for domestic companies planning to buy overseas assets," Duan said.

The Chinese buyers may have to invest around $550-600 million initially and it was quite likely that the Chinese bidders may form a consortium for the bidding, said Duan.

According to reports from the International Sleep Products Association, total mattress sales in the US fell 11 percent last year - the biggest drop in 20 years - as cash-strapped consumers delayed spending on replacement bedding.

Simmons, known for its Beautyrest mattresses, saw its sales dwindle along with higher raw material and fuel costs.

Not surprisingly, the brand had several owners in the past 24 years and is now owned by private equity firm Thomas H Lee Partners LP. The Atlanta-based firm sought bankruptcy protection in November after incurring $1 billion of debt by Sept 26 this year.

Private equity firm Ares Management LLC and the Teachers' Private Capital unit of the Ontario Teachers' Pension Plan have quoted $760 million for the brand in a prepackaged reorganization plan.

But analysts are not too enthused with Chinese companies planning to enter the fray.

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"Chinese companies should be careful with the $1 billion debt. They would have to infuse more funds into this company after they complete the acquisition. If they had these kind of funds, they would be better off using it for their own organic growth," said Yang Lei, secretary-general of China National Furniture Association.

The Simmons bedding company was born in 1870 when its founder Zalmon Simmons came across a new machine that could mass-produce woven wire mattresses. Simmons mattresses first entered China in 1935. Interestingly, the Chinese term for woven wire mattresses is Ximengsi, which is exactly the same as the Chinese pronunciation of Simmons. Currently Simmons has 34 outlets in 24 Chinese cities.

"Our sales have not been affected by the news of the bankruptcy protection. The mattresses priced at 30,000 yuan are among the most popular items in Beijing and there has been no shrinkage in our numbers," said a sales clerk at the Simmons outlet in the Easyhome home furnishing shopping mall in north Beijing.