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Top Sealy execs sitting tightTop executives in Sealy Inc. headquarters are reportedly hunting For new tasks amid disclosures of a bitter fight for control ofthis country's Number One bedding business. Details of this battle, which took place earlier control was Acquired by Ohio Mattress Co.. In December, are attest. In interviews with the principals involved in the tug-of-war Here and in Cleveland, where Ohio Mattress Co.. Is based, HFD hasheard that Ernest Wuliger, Ohio Mattress's mercurial chairman and chief executive officer, narrowly outbid a250-million proposalof Howard Haas, subsequently Sealy president, for ownership of seven crucial Sealy licensees. https://github.com/futonmattress/futon/wiki/Best-Futon-Mattress-Queen-Size Wuliger eventually paid $258 million to its franchises, giving Ohio Mattress 82 percent of all closely held stock and managementof the board of directors. Haas, who resigned Jan. 1 to become an independent adviser, Pieced together his bidding for Sealy control in partnership with adozen senior business executives and together with the heavy financial backing of the Pritzker family, the well-known Chicagofinanciers whose holdings include the Hyatt Hotel chain and Braniff Airlines. The executives, including vice president and general manager Richard Roe, remain at Sealy in the aftermath of the takeover. In aninterview, Wuliger--whose Ohio Mattress will suddenly double in size to approach $650 million in sales in 1987--suggested he isgoing to keep some of them on. "We have no clear vision of the future,' confessed a Staying Sealy executive that had been part of their Haas partnership. "We'reexpecting that the headquarters will be moved to Cleveland and some of us won't be asked to make the move. There's a high level ofanxiety right now.' Wuliger told HFD that no decision has been made about moving Sealy headquarters to Cleveland. Additional another source: "Everybody's got their resume out and Is trying to find a job. It's not a very comfortable position.' Really, negotiations for the production licenses reportedly Often became acrimonious past fall. Strategies for the sale of thecompany were put in motion virtually as soon as a district court judge affirmed a122-million anti-trust judgment against Sealy ina lawsuit lodged by Ohio and yet another licensee, Sealy Mattress Co.. of Michigan Inc., in June. According to knowledgeable sources, Haas was unable to increase the $135 million in money required by the courts as a bond at theproceedings. Finally he had been forced to guarantee the whole resources of the parent firm. Haas nonetheless remained convinced that the court award could be Reduced or perhaps quashed on appeal, a confidence not shared bysuch co-defendents as Morris Kaplan of Sealy of Illinois, Morton Yulman of Sealy of Eastern New York and William Walzer of SealyConnecticut. Sensing that shareholders had experienced enough of the 15-year legal Fight against Wuliger, that has repeatedly maintained thatSealy Inc. improperly stifled intra-brand contest, Haas reportedly visited investment banking houses in New York in Septemberseeking financing for a leveraged buyout of the licensees. When he was unable to secure enough capital, he switched to Jay and Robert Pritzker, Chicago acquaintances active in corporatebuyouts. Hass, 12 or so Sealy colleagues and the Pritzkers amassed a Package of $50 million in cash and another $200 million in borrowingsfinanced by First National Bank of Chicago and introduced it to the licensees, who were bargaining for a team in the hope ofoptimizing the value of the holdings. Definitive agreements were already being prepared, sources associate, when Wuliger and OhioMattress stepped in using their own supply. In the Long Run, it was learned, Haas lost in the bidding due to his Group couldn't match the powerful trump card held byWuliger--the looming lawsuit judgment. The executive forgave claims totaling $77 million-- Ohio's talk of this court award --alongwith his $258-million purchase price. Moreover, Wuliger is confident that talks to acquire Sealy Michigan--in progress-- will be completed soon, erasing the final $45million of liability shouldered from the licensees. "Howard Haas was prepared to go to the limit with Wuliger On this case,' explained one Sealy manager. "However, the licenseesguessed they could face another five years of appeals as well as the extra legal cost with no guarantee they would win. Theycouldn't manage the anxiety. https://medium.com/@colorpop1102/best-futon-mattress-reviews-64caaf6a0f47 Additionally, with less favorable capital gains tax treatment after Jan. 1, they believed it wasfinally time to sell out.' Additional a Pritzker spokesman: "To win the company, in effect, We would have had to outbid Mr. Wuliger by $77 million. The costwasn't possible' Another source explained the three-cornered discussions as Frequently vitriolic. "There was lots of table pounding and crying,' heexplained. "It became very emotional.' Really, the final deal capped nearly two years of constant Battle between Wuliger, who's headed Ohio Mattress since his father'sdeath in 1963, and Haas, who was elevated to the top job at Sealy in 1967. Wuliger, magnanimous in victory, elected not to contest a clause In Haas's contract which called for severance payments reportedlyexceeding $1 million. According to the terms of the contract, the 62-year-old Haas is totally free to compete against OhioMattress. Sealy had earnings of $525 million in 1986 (U.S. earnings totaled $420 million), up a healthy 10 percent in dollar volume from1985, and record profits. "Sealy had its best year in earnings and profits in 1986,' Haas declared. "I turned a great company overto Mr. Wuliger.' And yet new issues cropped up annually. Trade sources Said that Sealy Inc. became concerned over reports that major retailers wereinvesting shoppers away from heavily promoted, margin-thin Sealy products on their showroom floors and stearing them toward otherbrands that offer better profits. Moreover, there were mounting complaints that Ohio Mattress, owner of Stearns & Foster since1983, was shifting retail accounts to the secondary line. Again, the promise of better profits was employed as a bait. Wuliger would not remark on what he calls "business rumors.' He insists, in fact, that "Sealy is the very best name in most ofhouse furnishings. I aim to make it bigger and better' Wuliger estimates the size of the new Ohio Mattress will balloon from earnings of $297.4 Million from the fiscal year ended Nov.30 to between $640 million and $650 million in 1987. The business earned $11.6 million, or 72 cents a share, last year. Wuliger says that he does not "quarrel' with analysts' predictions Of $1.20 to $1.30 a share in net earnings this year. Theexecutive controls 26 percent of Ohio Mattress stock, which has risen from $13.50 before the acquisition to $17 from New YorkStock Exchange trading. Wuliger is coy about his marketing and advertising strategies for the future. Ohio Mattress's gross margins have plummeted fromthe 40-percent amount a couple of years ago to close to 30 percent now. It's presumed that trans-regional mattress transport,which ignited price wars before, will cease. "We'd certainly like to enhance our margins, and we could Accomplish this by raising prices or reducing prices,' Wuligerexplained. "On the other hand, we are not the sole player in the bedding industry. We intend to be aggressive in ensuring that wemaintain our marketshare and go after new marketshare.' Competitors are cautiously optimistic. Zenon Nie, executive vice President at Serta, considers the Sealy merger will probably pushup prices of non profit Sealy pieces advertised at under $100 per twin set lately. "The base of the market will move up in price,'Nie said. "However, I think pricing pressures will continue to be intense in the middle of this group. https://medium.com/@colorpop1102/futon-mattress-queen-size-48f28e0ee7c6 That is where themarketshare wars will be fought' Photo: Principals in the past year's conflict over Sealy report that Ernest Wuliger, above, Ohio Mattress Co.. chairman and chiefexecutive officer, narrowly outbid a $250-million proposal Launched by then-Sealy President Howard Haas for ownership of sevencrucial Sealy licensees. |