LEXINGTON, Ky. (AP) — Mattress company Tempur-Pedic is buying rival Sealy for about $228.6 million in cash.

Tempur-Pedic International Inc. said Thursday that it will pay $2.20 per Sealy share, which is a 3 percent premium to the company's Wednesday closing price of $2.14.

Sealy, based in Trinity, N.C., currently has about 103.9 million outstanding shares, according to FactSet. Its stock jumped 21 cents, or 9.8 percent, to $2.35 in premarket trading.

Tempur-Pedic says it will also assume or pay back all of Sealy Corp.'s outstanding debt. The Lexington, Ky., company plans to finance the acquisition with debt. Its shares gained $1.32, or 4.9 percent, to $28.10 before the market open.

The companies put the total value of the deal at $1.3 billion, including debt. They say that the transaction will create a $2.7 billion global bedding provider.

"Tempur-Pedic and Sealy together will have products for almost every consumer preference and price point, distribution through all key channels, in-house expertise on most key bedding technologies, and a world-class research and development team," Tempur-Pedic CEO Mark Sarvary said in a statement.

Tempur-Pedic and Sealy will run independently of each other, with Sealy's CEO Larry Rogers remaining in that position. Rogers will report to Sarvary.

Tempur-Pedic, founded in 1992, makes and distributes mattresses and pillows in more than 80 countries under its Tempur and Tempur-Pedic brands. Sealy, founded in 1881, makes mattresses under brands including Stearns & Foster, Sealy and Sealy Posturepedic.

While Tempur-Pedic has a particularly strong presence in North America, Europe and Asia, Sealy has a strong presence in North America, Asia and Argentina. Sealy also has strong brand recognition through its international licensees and joint ventures.

Stockholders with about 51 percent of Sealy's outstanding shares have put forth a written consent approving the deal. No additional shareholder approvals are needed to complete the acquisition.

Both companies' boards have approved the buyout, which is expected to close during 2013's first half.

Annual cost savings for the combined company are expected to be more than $40 million by the third year.