LEXINGTON, Ky. - Tempur Sealy (NYSE:TPX) International, Inc. (NYSE: TPX) has announced an update on its pending acquisition of Mattress Firm Group Inc., which is currently facing a legal challenge from the Federal Trade Commission (FTC). The litigation process is set to continue with hearings scheduled to begin on November 12, 2024.
In preparation for the acquisition, Tempur Sealy has reached an agreement to sell 73 Mattress Firm locations and its Sleep Outfitters subsidiary to Mattress Warehouse, a move that is contingent on the successful completion of the Mattress Firm deal. This divestiture includes 103 specialty mattress retail locations and seven distribution centers. The sale is expected to finalize approximately one quarter after the Mattress Firm acquisition is completed.
Scott Thompson, Chairman and CEO of Tempur Sealy, noted the divestiture process was part of the engagement with the FTC regarding the proposed acquisition. Bill Papettas, CEO of Mattress Warehouse, expressed confidence in the integration of the new locations into their portfolio, emphasizing the benefits for customers, team members, and vendor partners.
Tempur Sealy anticipates that the Mattress Firm operations will contribute to half of its North American sales and expects to operate over 2,800 retail locations worldwide post-acquisition. The company also projects annual run-rate synergies of $100 million by the end of the fourth year following the transaction's closure.
The forward-looking statements in the press release include expectations about the litigation's outcome, the acquisition's completion, and future performance, but the company acknowledged that these are subject to various assumptions and that actual results could differ materially.
The information in this article is based on a press release statement from Tempur Sealy International, Inc.
In other recent news, Tempur Sealy International reported strong second-quarter results for 2024, with net sales reaching approximately $1.2 billion and an adjusted EBITDA of $231 million, marking a 6% year-over-year improvement. This robust performance was primarily driven by the company's U.S. business, particularly the Tempur-Pedic brand. The adjusted EPS saw a 9% increase to $0.63, and the company announced a full-year adjusted EPS forecast indicating a 6% growth from the previous year.
In relation to stock ratings, a Wedbush analyst recently downgraded Tempur Sealy's status from "Outperform" to "Neutral," citing concerns over the stock's valuation. Despite this, Tempur Sealy continues to gain market share, especially in the high-end U.S. market.
Additionally, the company announced a new supply agreement with a Mattress Firm supplier, indicating further developments. However, the analyst expressed skepticism regarding the likelihood of the Mattress Firm acquisition and projected that Tempur Sealy's share gains are expected to decelerate. These are among the recent developments for Tempur Sealy International.
InvestingPro Insights
As Tempur Sealy International, Inc. (NYSE: TPX) navigates through its acquisition of Mattress Firm and prepares for potential growth, it's crucial to evaluate the company's financial health and market position. According to InvestingPro data, Tempur Sealy has a market capitalization of approximately $9.34 billion, reflecting its significant presence in the industry. The company's Price/Earnings (P/E) ratio stands at 24.91, which aligns with its adjusted P/E ratio over the last twelve months as of Q2 2024, indicating a consistent valuation by the market. Moreover, Tempur Sealy's Price/Book ratio is at a high 22.67, suggesting that investors value its assets quite richly relative to the company's net asset value.
InvestingPro Tips highlight that Tempur Sealy has been profitable over the last twelve months and has a history of strong returns, with a high return over the last decade and a robust return over the last five years. This profitability trajectory is a positive sign for investors looking at the company's long-term performance. Additionally, Tempur Sealy has raised its dividend for three consecutive years, a testament to its commitment to shareholder returns, and the dividend growth over the last twelve months as of Q2 2024 stands at 18.18%. However, it's worth noting that 10 analysts have revised their earnings downwards for the upcoming period, which might be a point of concern for potential investors.
For those interested in a deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/TPX, offering more insights into Tempur Sealy's financials and market performance.
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