– Significantly Expands Consumer
Touchpoints and Accelerates U.S. Omni-Channel Strategy
– Simplifies Consumer Purchase Journey
and Facilitates Innovation
– Streamlines Operations and Drives
Adjusted EPS Accretion
– Tempur Sealy to Host Conference Call
to Discuss First Quarter 2023 Results and the Transaction at
8:00 a.m. Eastern Time Today,
May 9th
LEXINGTON, Ky., May 9, 2023
/PRNewswire/ -- Tempur Sealy International, Inc. (NYSE: TPX,
"Company" or "Tempur Sealy") and Mattress Firm Group Inc.
("Mattress Firm") today announced that Tempur Sealy has signed a
definitive agreement to acquire Mattress Firm, the nation's largest
mattress specialty retailer, in a cash and stock transaction valued
at approximately $4.0 billion.
The transaction is expected to be funded by approximately
$2.7 billion of cash consideration
(subject to adjustments, including the repayment of Mattress Firm's
debt and other customary items) and $1.3
billion in stock consideration issued to Mattress Firm
shareholders, reflecting the issuance of 34.2 million shares of
common stock based on the closing share price of $37.62 as of May 8,
2023. The transaction is currently anticipated to close in
the second half of 2024, subject to the satisfaction of customary
closing conditions, including applicable regulatory approvals.
Following the close of the transaction, Mattress Firm is expected
to operate as a separate business unit within the Company.
Founded in 1986, Mattress Firm is the largest mattress specialty
retailer in the U.S., operating over 2,300 brick-and-mortar retail
locations and a growing e-commerce platform. Mattress Firm's more
than 6,200 highly trained retail sales associates provide
personalized service to help consumers choose the ideal bedding
products across their robust assortment of market-leading
brands.
This combination will complement Tempur Sealy's extensive
product development and manufacturing capabilities with vertically
integrated retail. Together, Tempur Sealy and Mattress Firm's
combined global footprint will include approximately 3,000 retail
stores, 30 e-commerce platforms, 71 manufacturing facilities, and 4
state-of-the-art R&D facilities worldwide. These combined
operations will be supported by more than 21,000 best-in-class
employees with a collective focus on providing breakthrough sleep
solutions to consumers in over 100 countries.
Tempur Sealy Chairman and CEO 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."
Thompson concluded, "We are excited by the long-term growth
prospects for our global vertically integrated Company. This
combination will accelerate our growth trajectory and enhance
operating cash flow. Mattress Firm has been a valued retail partner
for more than 35 years, and we look forward to welcoming their
talented workforce of more than 8,100 employees to the Tempur Sealy
family."
Mattress Firm CEO John Eck said,
"We know that every customer has unique needs and wants when it
comes to a sleep solution that is perfect for them. As part of
Tempur Sealy, our customers will benefit from our combined
portfolio of highly recognized brands and products, extensive
omni-channel capabilities, industry leading innovation and
best-in-class teams. Under Tempur Sealy's leadership, our combined
company will be in a unique position to take advantage of our
shared values and complementary capabilities to better address
consumers' needs and drive growth."
Strategic Rationale
The combination with Mattress Firm
is expected to enhance Tempur Sealy's ability to meet consumers'
needs, expand growth opportunities, and streamline operations.
We expect to leverage the individual strengths of Tempur Sealy
and Mattress Firm to realize six strategic benefits through this
acquisition.
- Expanding Consumer Touchpoints. Mattress Firm's and Tempur
Sealy's combined consumer touchpoints will create opportunities to
keep pace with consumers' evolving preferences. Being closer to the
U.S. bedding consumer will also broaden opportunities to develop
lifetime relationships with consumers.
- Accelerating U.S. Omni-Channel Strategy. Mattress Firm's more
than 2,300 brick-and-mortar retail stores, robust e-commerce
capabilities, and sleep education and sleep tracking platforms
complement Tempur Sealy's direct-to-consumer operations, enabling a
seamless omni-channel ecosystem that meets the needs of more
consumers nationwide.
- Simplifying the Consumer Purchase Journey. This combination
facilitates targeted marketing efforts to drive incremental brand
awareness through blended advertising and share of voice, and
enhance consumer understanding of bedding innovation, including
health and wellness benefits. Further, the combination brings
together Tempur Sealy's and Mattress Firm's highly trained retail
sales and customer service teams to expand customer service
capabilities, facilitate improved consumer outcomes, and simplify
the consumer purchase journey.
- Facilitating Consumer-Centric Innovation. The alignment of new
product development and testing will enable a more targeted,
end-to-end innovation approach and enhances opportunities to invest
in, test, and refine new sleep technologies.
- Streamlining Operations and Enhances Supply Chain Management.
Enhanced visibility to consumer demand creates opportunities for
more agile and fortified supply chain management. Combined scale
and vertically integrated infrastructure across the combined
company drives operational efficiencies across logistics,
transportation, warehousing, supply chain planning, sourcing, and
product development, streamlining the order-to-delivery process for
all customers.
- Driving Adjusted EPS Accretion. Tempur Sealy has a strong
track record of creating long-term value from highly strategic
M&A activities. This acquisition is expected to be accretive to
adjusted EPS before synergies in the first year post close.
Adjusted for the impact of run-rate synergies, this acquisition is
expected to deliver low double digit adjusted EPS accretion.
Cost Synergies
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. The Company
expects to achieve synergies by leveraging its global scale and
vertically integrated infrastructure to drive efficiencies through
logistics, product lifecycle management, manufacturing
optimization, and sourcing initiatives.
Transaction Overview
Under the terms of the agreement,
Tempur Sealy will purchase Mattress Firm for an enterprise value of
approximately $4.0 billion. The
transaction is expected to be funded by approximately $2.7 billion of cash consideration (subject to
adjustments including the repayment of Mattress Firm's debt and
other customary items.) and $1.3
billion in stock consideration issued to Mattress Firm
shareholders, reflecting the issuance of approximately 34.2 million
shares of Tempur Sealy common stock based on the closing price of
$37.62 per share as of May 8, 2023. Following the transaction, Mattress
Firm's and Tempur Sealy's shareholders will own approximately 16.6%
and 83.4% of the combined company, respectively, based on the
Company's shares outstanding at the time of signing. Tempur Sealy
expects to expand its existing Board of Directors by appointing two
mutually-agreed Mattress Firm directors to the Tempur Sealy Board
following the closing of the transaction.
Tempur Sealy plans to fund the cash portion of the transaction
using a combination of cash on hand and proceeds from a combination
of new secured and unsecured financing, a portion of which will be
used to repay Mattress Firm's outstanding debt. The combined
company's expected net leverage at closing per the Company's credit
agreement after giving effect to the transaction is expected to be
between 3.0x and 3.25x adjusted EBITDA. Tempur Sealy expects to
return to its net leverage target range of 2.0x to 3.0x adjusted
EBITDA in the first 12 months after closing, supported by the
increased earnings and free cash flow outlook of the combined
company.
Timing and Approvals
The transaction has been approved
by the board of directors of Tempur Sealy and Mattress Firm.
Mattress Firm shareholders holding more than 80% of Mattress Firm's
outstanding shares have signed voting agreements in support of the
transaction. The transaction does not require Tempur Sealy
shareholder approval.
The transaction is expected to close in the second half of 2024,
subject to the satisfaction of customary closing conditions and
applicable regulatory approvals, including receipt of clearance
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.
The Company has received a request for additional information
and documentary material from the Federal Trade Commission ("FTC")
in connection with the FTC's review of the transaction. The Company
expects to work cooperatively with the FTC to complete the
acquisition.
Tempur Sealy Conference Call
In a separate press
release issued today, Tempur Sealy released its results for the
first quarter 2023. The Company's earnings press release can be
found on the Company's investor relations website at
investor.tempursealy.com.
Tempur Sealy will host a conference call to discuss the first
quarter results and the transaction today at 8:00 a.m. Eastern Time. The call will be webcast
and can be accessed on the Company's investor relations website.
After the conference call, a webcast replay will remain available
on the website for 30 days. Associated presentation materials and
an infographic regarding the transaction will also be available on
the Company's investor relations website.
Advisors
J.P. Morgan Securities LLC is serving as sole
financial advisor and Cleary Gottlieb
Steen & Hamilton LLP is serving as legal counsel to
Tempur Sealy. Goldman Sachs & Co. LLC, Barclays, and Jefferies
LLC are serving as financial advisors and Simpson Thacher &
Bartlett LLP is serving as legal counsel to Mattress Firm.
Forward-Looking Statements
This press release contains
statements that may be characterized as "forward-looking" within
the meaning of the federal securities laws. Such statements might
include information concerning one or more of the Company's plans,
guidance, objectives, goals, strategies, and other information that
is not historical information. When used in this release, the words
"will," "targets," "expects," "anticipates," "plans," "proposed,"
"intends," and variations of such words or similar expressions are
intended to identify forward-looking statements. These
forward-looking statements include, without limitation, statements
relating to the Company's expectations regarding its share
repurchases, adjusted EPS, net leverage, future performance, cost
synergies, funding sources, ability to deleverage after the
transaction, integration with our business, personnel and the
impact of the anticipated acquisition on the Company's brands,
products, customer base, results of operations, or financial
position. Any forward-looking statements contained herein are based
upon current expectations and beliefs and various assumptions.
There can be no assurance that the Company will realize these
expectations or that these beliefs will prove correct.
Numerous factors, many of which are beyond the Company's
control, could cause actual results to differ materially from any
that may be expressed herein as forward-looking statements. These
potential risks include risks associated with Mattress Firms'
ongoing operations; the ability to successfully integrate Mattress
Firm into Tempur Sealy's operations and realize synergies from the
transaction; the possibility that the expected benefits of the
acquisition are not realized when expected or at all; general
economic, financial and industry conditions, particularly
conditions relating to the financial performance and related credit
issues present in the retail sector, as well as consumer confidence
and the availability of consumer financing; the impact of the
macroeconomic environment in both the U.S. and internationally on
Mattress Firm and the Company; uncertainties arising from national
and global events; industry competition; the effects of
consolidation of retailers on revenues and costs; and consumer
acceptance and changes in demand for Mattress Firm's and the
Company's products the factors discussed in the Company's Annual
Report on Form 10-K for the year ended December 31, 2022. There may be other factors
that may cause the Company's actual results to differ materially
from the forward-looking statements. The Company undertakes no
obligation to update any forward-looking statement to reflect
events or circumstances after the date on which such statement is
made.
About Tempur Sealy International
Tempur Sealy is
committed to improving the sleep of more people, every night, all
around the world. As a leading designer, manufacturer, distributor,
and retailer of bedding products worldwide, we know how crucial a
good night of sleep is to overall health and wellness. Utilizing
over a century of knowledge and industry-leading innovation, we
deliver award-winning products that provide breakthrough sleep
solutions to consumers in over 100 countries.
Our highly recognized brands include Tempur-Pedic®, Sealy® and
Stearns & Foster® and our popular non-branded offerings consist
of value-focused private label and OEM products. At Tempur Sealy we
understand the importance of meeting our customers wherever and
however they want to shop and have developed a powerful
omni-channel retail strategy. Our products allow for complementary
merchandising strategies and are sold through third-party
retailers, our 700+ Company-owned stores worldwide and our
e-commerce channels. With the range of our offerings and variety of
purchasing options, we are dedicated to continuing to turn our
mission to improve the sleep of more people, every night, all
around the world into a reality.
About Mattress Firm
Mattress Firm, the nation's
largest omni-channel mattress specialty retailer, has been helping
solve America's sleep problems for more than 90 years through our
family of brands. Every one of our more than 6,200 passionate Sleep
Experts® are driven by a common purpose: to change people's lives
through better sleep. Whether browsing online or in one of our
2,300+ stores, our highly trained team provides personalized
service and advice to help customers choose the right mattress and
bedding products based on their unique needs. Our expertly curated
selection of products include leading brands such as Beautyrest®,
Nectar®, Sealy®, Serta®, Simmons®, Sleepy's® Stearns & Foster®,
Tempur-Pedic®, Tuft & Needle®, tulo®, and Purple®.
No matter the time of night, Mattress Firm wants to help people
get the sleep they deserve. Our Sleep.com website provides expert
advice and helps people explore the health benefits of quality
sleep, and the Sleep.com app provides free sleep tracking and
personalized insights to improve sleep.
Investor Relations Contact
Aubrey Moore
Investor Relations
Tempur Sealy International, Inc.
800-805-3635
Investor.relations@tempursealy.com
Media Contacts
For Tempur Sealy:
FGS Global
TempurSealy@fgsglobal.com
For Mattress Firm:
Katie Clark
Mattress Firm Group Inc.
katie.clark@MFRM.com
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SOURCE Tempur Sealy International, Inc.