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KKR’s Sealy sale could be stopped following shareholder lawsuit

18 Oct 2012

Buyout giant KKR’s $229m sale of mattress-maker Sealy Corp could be scrapped by a judge if shareholders win a lawsuit filed against the deal.

The private equity giant agreed a $2.20 per share sale to strategic buyer Tempur-Pedic last month after gaining the support of shareholders controlling more than 50 per cent of the company. The firm itself holds about 46 per cent.

Other investors claim they have been shortchanged by the deal, claiming KKR and Sealy executives did not attempt to source a better offer for the business.

KKR’s holding of Sealy has been a long one, having paid fellow buyout house Bain Capital about $1.5bn for the company in 2004.

Investors have suggested in the filing KKR was “pushing the proposed transaction to advance its own private interests”, namely cashing out of a company that had been its books for too long.

It is not the first time Sealy shareholders have shown their anger at the company’s board and private equity owner.

The firm was publically attacked by H Partners earlier this year for burdening the company with debt, while also acting as if it was in sole control of the company.

Debt-laden Sealy, which was once dominant in the US mattress market, has been caught up by fast-moving companies such as Tempur in recent years.

The lawsuit is Curtis Nall v. Lawrence Rogers, 7957, Delaware Chancery Court

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