Bedtime M&A uncovers big dealmaker dreams
13/04/2026 18:00
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. By Jonathan Guilford NEW YORK, April 13 (Reuters Breakingviews) - Bedtime M&A stories are getting livelier. Mattress-maker Somnigroup SGI.N, owner of Tempur Sealy, unveiled a $2.5 billion plan to buy manufacturer Leggett & Platt LEG.N. It would birth a springs-to-stores sleep empire, two years after trustbusters sued to stop the merger that created the company in the first place. Soporific trustbusters help explain why dealmakers are dreaming big. Leggett & Platt provides the components of a good night's rest, such as coils, frames and foam. About 35% of Somnigroup's costs of goods sold are of this commodity-driven sort, Jefferies analysts estimate. With conflict in the Middle East threatening a fresh bout of inflation and rising supply expenses, owning the entire value chain would help soothe some of CEO Scott Thompson's nightmares. It also fits with his long-term plans. Somnigroup in 2024 united with Mattress Firm, then the largest U.S. bedding retailer. The Federal Trade Commission sued to stop the combo, arguing it could block rivals from accessing showroom floors. A judge, however, sided with the companies. Tempur Sealy’s previous mid-40% share of Mattress Firm sales is now on track to exceed 60%, the Jefferies crew reckons. There's already proof of vertical-integration concept. Somnigroup’s shares have gained some 60% over the past two years while the market values of rival upstarts Purple Innovation PRPL.O and Sleep Number SNBR.O collapsed. In December, Thompson capitalized on the stock strength to propose an all-stock deal for Leggett & Platt. After taxing the $50 million of promised annual cost savings and the target’s nearly $260 million of expected operating profit in 2026, according to Visible Alpha, the implied return on capital is a healthy 10%. A nagging pea may cause some tossing and turning, however. Bedding only comprises 38% of Leggett & Platt’s revenue, alongside a higher-margin automotive arm and chunky furniture segment. These are an awkward fit for Somnigroup, even though they might command a better valuation multiple under its roof. Leggett & Platt trades at 6 times expected EBITDA; Somnigroup fetches 14 times. And although the company says it plans to keep those businesses, it also could sell them later. Now is a good time for king-size ambitions. The Trump administration has taken a laissez-faire approach to policing deals. From technology giant Hewlett Packard Enterprise to media conglomerate Paramount, transactions that probably would have been doomed not long ago are winning approval. Chief executives emboldened to chance M&A that will build or secure market dominance are bound to sleep easier these days. Follow Jonathan Guilford on X and LinkedIn. CONTEXT NEWS Somnigroup, owner of mattress brand Tempur Sealy and retailer Mattress Firm, said on April 13 it had agreed to buy foam and inner-spring supplier Leggett & Platt in a $2.5 billion all-stock deal. Under the terms of the transaction, Leggett & Platt stockholders will receive 0.1455 shares of Somnigroup for each share held, worth about $11.36 apiece based on undisturbed trading prices. Somnigroup first publicly proposed to acquire Leggett & Platt in December. Goldman Sachs is advising Somnigroup and JPMorgan is advising Leggett & Platt. Springy stock: Somnigroup trounces rivals https://www.reuters.com/graphics/BRV-BRV/BRV-BRV/znvnmjwzypl/chart.png (Editing by Jeffrey Goldfarb; Production by Pranav Kiran) ((For previous columns by the author, Reuters customers can click on GUILFORD/ Jonathan.Guilford@thomsonreuters.com))