Arsenal Capital Partners, the New York middle-market private equity firm, has moved to make its second and third investments in March in manufacturers of foam for bedding, furniture and related items.
Arsenal Capital has taken a majority stake in Elite Foam Inc. of Newnan, Georgia, which makes specialty foam for bedding and home furnishings, and signed an agreement to acquire the foam production assets of Hickory Springs Manufacturing Co. under the HSM Foam name. Earlier in March, Arsenal invested in Pacific Urethanes LLC of Ontario, California, which makes specialty foam for bedding, furniture and packaging .
By combining the three complementary manufacturers, Arsenal reports that it intends to build a leading specialty foam business under the Elite Comfort Solutions name, starting with a national network of 10 production plants. Each of the three management teams will continue to operate under the Elite Comfort Solutions name, working together with Arsenal as complementary pieces, says John Televantos, Arsenal partner and co-head of the firm’s specialty industrials group.
Elite Foam’s technologies portfolio includes high air flow and cooling processes in the making of foam. HSM Foam, headquartered in Conover, North Carolina, is one of the largest producers of flexible polyurethane foam in North America, making foam used in furniture, bedding, medical and packaging market applications. Its range of products includes foams that inhibit combustion and bio-based polyurethane foam. Besides Conover, HSM Foam has operations Fort Smith, Arkansas; Verona, Mississippi; Commerce, California; and Americus, Georgia. The HSM Foam asset purchase is expected to close early in the second quarter of 2016.
Arsenal Capital manages $2.6 billion of committed equity capital. Another company backed by the PE firm, Accella Performance Materials, has made deals recently in the spray foam business, including adding the spray foam division of Quadrant Chemical Corp.
Other recent deals in the furniture and mattress business have included Hook Furniture Corp. (Nasdaq: HOFT) agreeing in January to buy Home Meridian International Inc. for $100 million and Mattress Firm Holding Corp. (Nasdaq: MFRM) agreeing in November 2015 to buy Sleepy’s for $780 million, bringing together the largest U.S. specialty mattress retailers.