Tempur To Buy Mattress Firm For Around $4 Bln In Cash, Share; TPX Stock Down In Pre-market

Tempur Sealy International, Inc. (TPX), a maker of mattresses and bedding products, said on Tuesday that it has inked a deal to buy Mattress Firm Group Inc., a specialty mattress retailer, in a cash and share transaction valued at around $4 billion.

Following the news, TPX was trading down by 2.98 percent at $36.50 per share in the pre-market trading on the New York Stock Exchange.

Tempur Sealy, CEO of Scott Thompson, said, “This transaction advances all four of our key long-term initiatives: to develop the highest quality bedding products, promote brands with compelling marketing, optimize our diverse omnichannel distribution platform, and drive EPS growth. Consistent with our M&A strategy, this acquisition will make Tempur Sealy more competitive by bringing us closer to consumers and facilitating continued innovation.”

The transaction is expected to be funded by approximately $2.7 billion of cash, and remaining $1.3 billion by stock consideration, which reflects the issuance of 34.2 million shares based on the closing share price of $37.62 on May 8.

Post transaction, scheduled to be closed in the second half, Mattress Firm’s and Tempur Sealy’s shareholders will own around 16.6% and 83.4% of the combined company, respectively.

Mattress Firm will operate as a separate business unit within TPX following the closure of the deal.

Tempur Sealy expects to begin realizing synergies by the end of year two after closing and to realize at least $100 million in annual run-rate synergies by the end of year four after closing.

Together, Tempur Sealy and Mattress Firm’s combined global footprint will include around 3,000 retail stores, 30 e-commerce platforms, 71 manufacturing facilities, and four state-of-the-art R&D facilities worldwide.

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