Dive Temporary:
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Tempur Sealy, going through a Federal Commerce Fee problem to its proposed $4 billion merger with retailer Mattress Agency, has agreed to promote its Sleep Outfitters subsidiary and a portion of Mattress Agency’s footprint, per monetary filings Monday.
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Topic to approval of the Tempur Sealy-Mattress Agency deal, MW SO Holdings Firm, also called Mattress Warehouse, will purchase 73 Mattress Agency places plus Sleep Outfitters’ 103 specialty mattress retail places and 7 distribution facilities.
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Hearings on the FTC’s problem are scheduled to start Nov. 12 and anticipated to final two weeks. Tempur Sealy expects them to wrap up “within the coming months, which might permit the deal to shut in late 2024 or early 2025,” as anticipated, per the submitting.
Dive Perception:
In keeping with a press release from Tempur Sealy CEO Scott Thompson, this transfer comes out of discussions with regulators and is a part of the corporate’s effort to maneuver its acquisition of Mattress Agency ahead.
Nevertheless, it’s not clear how a lot its cope with Mattress Warehouse would alter regulators’ argument {that a} Tempur Sealy-Mattress Agency merger would bestow “huge energy at a number of elements of the mattress provide chain” to the mixed firm and allow it “to suppress competitors and lift costs for mattresses for hundreds of thousands of shoppers.”
The FTC declined to remark.
As of July, in accordance with paperwork filed within the FTC’s case, Mattress Agency ran about 2,300 brick-and-mortar shops, and Tempur Sealy owned about 99 Tempur-Pedic and 109 Sleep Outfitters shops. If and when these proposed offers shut, Tempur Sealy expects to run greater than 2,800 shops globally and derive half of its North American gross sales from Mattress Agency, per its Monday submitting.
Mattress Agency had closed some 700 places by the point it exited its 2018 chapter and since then has closed a couple of hundred extra. Regardless of what remains to be a considerable footprint and its self-description as “largest mattress specialty retailer within the U.S.,” the retailer in its July authorized submitting stated it “denies that its retail footprint ‘dwarfs’ that of all different mattress specialty retailers and furnishings shops” or that “its shops are ‘ubiquitous.’”
Mattress Warehouse, with greater than 320 shops, states that it’s the second-largest retailer within the house.
Together with the brick-and-mortar divestiture plan, Tempur Sealy on Monday introduced a proposed senior secured time period mortgage in an mixture principal quantity of as much as $1.6 billion, which is able to mature in seven years. The time period mortgage, money obtainable and different debt would fund the proposed Mattress Agency acquisition, per the submitting.
S&P Rankings analysts gave the proposed debt a preliminary BBB- score, noting that the deal might not undergo. Additionally they put “each tranches of [Tempur Sealy’s] unsecured notes on CreditWatch with unfavorable implications, reflecting that we might decrease our score on this debt as much as one notch to ‘BB-‘ from ‘BB’ and revise the restoration score to ‘5’ from ‘3’ if the transaction closes. The potential decrease scores on the notes mirror the substantial enhance in senior secured debt below this transaction, revising restoration outcomes for unsecured debtholders.”
