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From Home Furnishing Business

Tempur Sealy Amends Shareholder Rights Plan

Mattress producer Tempur Sealy International (NYSE: TPX), whose stock has been under pressure since it terminated supply contracts with its largest customer earlier this year, has amended a stockholder rights plan adopted in February to allow a "qualified offer" for the company to be exempt from triggering the plan's provisions.

The company said the original plan would give stockholders the right to purchase additional shares should a stockholder accumulate more than 20% of the stock. However, the amended version would allow the board to create an exemption in certain instances, and give holders of at least 10% of the stock the right to ask for a special meeting of stockholders to vote on the exemption.

The company said the provision "is intended to ensure that the Rights Plan does not discourage prospective acquirers from making offers to acquire Tempur Sealy that stockholders believe may be in their best interests."

Company officials said they are not aware of any current or potential takeover offers, but said the Rights Plan and the amendment are in place to protect shareholders from takeover attempts that the board believes are not in the best interest of all shareholders.

If the board were to trigger the Rights Plan, the issuing of additional shares would make it more difficult for a stockholder or group of stockholders to gain control of the company.

"With the addition of the qualified offer stockholder exemption provision, we believe the Rights Plan reaches an appropriate balance between protecting our stockholders from coercive and unfair takeover attempts and current best practices in corporate governance that give stockholders a voice in determining whether a particular acquisition offer is in their best interests," said Scott Thompson, president and CEO of Tempur Sealy.

Shareholders will vote on ratifying the Rights Plan at the company's annual meeting later this year. The plan is set to expire Feb. 7, 2018.

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