UPDATE 3-Serta owner to buy Simmons in $760 mln deal

(Recasts, adds information about Serta)

* Simmons and Serta combined beat out Sealy

* Simmons will file for bankruptcy

By Caroline Humer

NEW YORK, Sept 25 (Reuters) - Mattress makers Simmons and Serta are planning to dethrone competitor Sealy as the world's largest mattress company in a $760 million deal that includes Simmons filing for bankruptcy.

Simmons Co said on Friday that it has put together a restructuring plan to be sold to private-equity firm Ares Management LLC and a unit of the Ontario Teacher's Pension Plan, which owns competitor Serta.

Together, Serta and Simmons - which will continue to operate as separate companies and brands - will have a bigger share of the market than current world leader Sealy Corp (ZZ.N: Quote, Profile, Research), according to according to market research firm IBISWorld Inc.

Simmons, which is owned by private equity firm Thomas H. Lee, has been negotiating with lenders and creditors since late 2008 as a heavy debt load and a decline in consumer demand squeezed its profits and caused it to miss financial targets required by a loan associated with its 2003 buyout.

The Atlanta-based company said the prepackaged restructuring plan has more than the two-thirds support from its noteholders and lenders needed and will reduce its debt to about $450 million from $1 billion. The deal includes about $310 million in new equity from Serta's owners.