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From Home Furnishing Business

L&P Acquires Tempur Sealy Innerspring Production

Leggett & Platt (NYSE: LEG) has acquired Tempur Sealy International's (NYSE: TPX) three U.S. innerspring plants and equipment.

The deal, worth around $48 million in total consideration, came as Tempur Sealy decided to exit domestic production of innersprings and components.

In addition, the two companies have expanded and extended their supply relationship whereby Leggett & Platt, Carthage, Mo., will become the exclusive long-term supplier in the United States and Canada of wire-based innersprings for Tempur Sealy, Lexington, Ky.; and of boxsprings for Sealy.

The transaction creates significant benefits as it leverages the strengths of two key players of the global bedding industry; and paves the way for multi-year strategic product development initiatives between the two companies.

"Our decision to exit the production of innerspring components in the U.S. will allow us to focus our investments on brand building and product innovation while improving our working capital position," said Tempur Sealy International CEO Mark Sarvary. "Leggett & Platt is a well-established leader in the industry and our expanded relationship will provide significantly greater flexibility for our product development efforts."

"We are very pleased to become a long-term provider of components to Tempur Sealy, and we look forward to the expanded strategic partnership," said Leggett & Platt Chairmain and CEO David Haffner. "The additional production should enhance economies of scale, benefit from our vertical integration in steel rod and wire, and allow manufacturing optimization across a broad asset base. We expect this agreement to add approximately 2 percent to sales, and be neutral to EPS over the first year as we execute the integration plan."

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