June 25, 2013,
Hollander's acquisition of Louisville Bedding's retail business changes the face of the basic-bedding industry
Hollander's New York City showroom. The company has further expanded its basic-bedding product line and brands with its acquisition of Louisville Bedding.
By David Gill
April, Hollander and Louisville Bedding signed a definitive agreement for Hollander to acquire the latter's retail business in mattress pads and bed pillows. The deal closed late in May. Under the terms of the agreement, Louisville Bedding will hold onto its contract bedding component business. Hollander has changed its corporate name to Hollander Sleep Products.
The deal weds two of the oldest companies in the basic bedding business. Louisville Bedding was founded in 1889, and has since grown to become the world's largest supplier of mattress pads. Hollander, founded in 1953, is now the world's largest supplier of bed pillows.
"The acquisition boosts our brand portfolio and provides additional manufacturing facilities in North America." Chris Baker, Hollander
It is also the latest step in the consolidation of the industry. Twenty years ago, four companies dominated the basic-bedding business: Along with Hollander and Louisville Bedding, there were Pillowtex, at one time the largest company in the basic-bedding business, and Pacific Coast Feather.
Since that time, Pillowtex--which acquired Fieldcrest Cannon in 1997, in an attempt to cast itself as a one-stop home textiles supplier--was forced to liquidate its business in 2003, after filing for Chapter 11 bankruptcy protection twice in three years. Pacific Coast Feather remains, and itself grew larger with its acquisition of United Feather & Down two years ago.
This deal makes sense from the standpoint of both companies. With the combination now in place, according to Chris Baker, Hollander's CEO, Hollander has further strengthened its ability "to provide outstanding products and service to our customers."
The company is now more empowered from a product standpoint as well. "The acquisition boosts our brand portfolio and provides additional manufacturing facilities in North America, expanding our capabilities and enhancing our distribution net," Baker said.
Regarding the brands, the Hollander roster is already huge--consisting, before the acquisition, of licenses with Ralph Lauren, Laura Ashley, Waverly, HoMedics and Royal Velvet, among others; and brands developed in house such as Arctic Feather and Down, Earth Essentials, Healthy Home and Velvet Dreamer. With the closing of this deal, Hollander's portfolio now also includes Louisville Bedding's signature brands, such as Simmons Beautyrest, Croscill, Nautica and La-Z-Boy.
It's a sensible deal from Louisville Bedding's point of view as well. "There are many similarities between us," said Steve Elias, CEO of Louisville Bedding, who is staying with the company. "Our cultures and our ways of doing business match very well. We've always led in mattress pads and they've always led in bed pillows."
There are other cultural similarities between the two companies. "Hollander is a family business and we've always been sort of a family business in that our ownership is tightly held," Elias said. "Both companies have many long-tenured employees, so our thinking on many things has been so similar. We have always remained U.S. manufacturers as well, same as Hollander."
The issue of scale which Baker mentioned is another reason that the deal makes sense, Elias added. "Look at the retail landscape, what's happening in the marketplace," he said. "When you consider the consolidation among retailers, there's something to be said for scale in both manufacturing and product offerings."
Regarding Louisville Bedding's decision to hold onto its component business, Elias said, "This has been the fastest growing part of our business." Louisville Bedding's contract sector produces components and fiber for mattresses. "We have found a real niche in the equipment end because of our basic-bedding expertise," he said.
This portion of the business has been prosperous recently because of the recovery in the mattress industry in recent years. But, as Elias noted, Louisville Bedding will also thrive because of its ability to adapt.
"We came out with the Expand-A-Grip skirt, which revolutionized the mattress-pad business," he said. "We also came out with Beautyrest in mattress pads, the first branded line in this category. This brand proved to be so strong that it enabled us to enter the bed-pillow business, too."
As far as the future, Elias believes that the contract business has more opportunities. "We see continued growth and expansion into related products, such as the processing of fiber and quilted mattress components." As far as the basic-bedding category, the company is apparently leaving this behind. "We don't see us getting into finished products again in the near future," Elias said.